European Commission - Press release
State aid: Commission temporarily approves rescue aid for Danish Amagerbanken
Brussels, 06 June 2011 - The European Commission has granted temporary approval, under EU State aid rules, to Danish support towards the liquidation of Amagerbanken, which was declared bankrupt in February 2011. The aid is limited to what is necessary to facilitate an orderly wind-up of the Amagerbanken, the country's 8th largest bank, which has been in trouble since it was severely hit by the 2008 financial crisis.
The liquidation of the bank is being carried out in accordance with the Danish scheme for winding-up financial institutions in distress (see IP/10/1266). The plan involves measures that require swift Commission approval, which is being granted provisionally.
The Commission found that the measures, comprising a conditional agreement on the transfer of assets and certain liabilities, a liquidity facility agreement and a subordinated loan, are temporarily compatible with Article 107(3)(b) of the Treaty on the Functioning of the European Union as set out in the Commission's guidance on aid for banks during the crisis (see IP/08/1495). Those guidelines provide that a state aid should be proportionate to the objective, well targeted and limited to the minimum necessary. This is the case for Amagerbanken.
Another criteria is that the private sector should contribute to the state aid effort. In that case, the bank, its shareholders and its subordinated debt holders are contributing sufficiently. Finally, measures will be taken to limit the negative spill-over effects for other competitors. The measures in favour of Amagerbanken are approved for six months or, if the Danish authorities submit a wind-up plan within six months, until the Commission has adopted a final decision on that plan.
Today, the Commission also approved liquidation aid to EIK, another Danish bank (see IP/11/677).
Amagerbanken, the 8th largest bank in Denmark, was hit in 2008 by the financial crisis and needed to refinance it on the market, in order to balance necessary asset write-downs. After continuous unsuccessful efforts to obtain new financing or to find other solutions, Amagerbanken was declared bankrupt on 7 February 2011. Previously, on 6 February 2011, Amagerbanken had entered into a conditional transfer agreement with the Danish publicly owned Financial Stability Company (FSC), as part of the Danish bank wind-up scheme (see: IP/10/1266).
The activities of Amagerbanken will be wound up in accordance with the scheme, whereby all assets and certain liabilities have been transferred to Amagerbanken as 2011 A/S, the “New Bank”, which is owned by the FSC. These assets transferred to the New Bank will be either sold or wound-down.
In September 2010, the Commission authorised a resolution scheme for the handling of distressed banks in Denmark. In total four banks are going or have gone through this liquidation in Denmark: Roskilde (see IP/08/1633), Fionia (see IP/10/1374), EIK and Amagerbanken.
For more information:
The non-confidential version of the decisions will be made available under the case number SA_32634 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.