As part of the restructuring plan, the Danish State has signed an agreement with a consortium of Danish private investors to acquire the State's entire share in the bank, as a result of which the bank will again be fully private. The investor consortium will make a capital injection into the bank and repay the remaining outstanding state-funded hybrid capital. Vestjysk Bank will focus its activities on its core business and take measures to increase its efficiency.
Commissioner Margrethe Vestager, in charge of competition, said: "Vestjysk Bank will continue its in-depth restructuring to ensure its long-term viability, back in private hands and without any additional public support. The plan enables the bank to continue to serve its many retail, small business and farming customers while minimising potential distortions to competition."
In April 2012, the Commission temporarily approved up to DKK 8,941 million (€1.2 billion) state support for Vestjysk Bank as rescue aid under the state aid rules applicable at the time (the 2008 Banking Communication), pending the submission of suitable restructuring measures. As a result of this intervention, the Danish State became the majority shareholder (81.47%) in Vestjysk Bank.
In December 2015, the Commission opened a formal investigation to verify whether the restructuring plan submitted by Denmark would ensure the bank's return to long-term viability. At the same time, Denmark launched a sales process in order to divest the State's entire stake.
In today's decision, the Commission found that the sales process was conducted on a fair, open and transparent basis, and that, under the terms of the agreement with the private consortium, the sales price will be positive. The Commission was therefore able to conclude that Denmark does not grant any further aid to the bank, or the buyer, through the sale. The Commission also concluded that the restructuring plan presented by Denmark in cooperation with the consortium will ensure Vestjysk Bank's long-term viability and adequately addresses potential distortions to competition. On this basis, the Commission concluded that the aid temporarily approved in 2012 as rescue aid remains in line with EU state aid rules.
Vestjysk Bank is currently the 15th largest bank in Denmark, with a market share of less than 0.3%.
In April 2012, two Danish banks - Vestjysk Bank and Aarhus Lokalbank merged to become Vestjysk Bank A/S which is mainly active in the Danish region of western Jutland. The Commission temporarily approved up to DKK 8,941 million (€1.2 billion) state aid for Vestjysk Bank A/S. In practice, the bank received public capital injections of DKK 341 million (€46 million) as well as guarantees of DKK 6.8 billion (€914 million).
On 12 June 2017, Denmark signed an irrevocable undertaking with a consortium of Danish long-term private investors on the sale of the Danish State's 81.47% share in Vestjysk for a total consideration of approximately DKK 123 million (€16.5 million). This process has closed on 18 July 2017. The private shareholders of the bank have the possibility to sell their shares to the consortium under the same conditions as offered to the State. The consortium will also guarantee the completion of a share issue resulting in DKK 745 million (€100 million) in new equity. Following the refinancing of its subordinated capital base, the bank will repay the approximately DKK 287.6 million (€38.7 million) in remaining outstanding state-funded hybrid capital.
Given the great uncertainty about the banks' problems in the early stages of the financial crisis and the need for quick action, the Commission's 2008 Banking Communication allowed for "rescue aid", which meant that state aid for banks could be approved on a temporary basis. Member States then had to submit a restructuring plan for banks receiving rescue aid to receive final approval by the Commission. In August 2013 the Commission adopted a new Banking Communication (see Memo, full text here), which replaced the 2008 Banking Communication and is still in force today.
More information will be made available under the case number SA.34720 in the State Aid Register on the Commission's 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.