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Brussels, 28 th January 2010

State aid: Commission approves Dutch recapitalisation of SNS REAAL

The European Commission has approved, under EU state aid rules for restructuring of banks, the recapitalisation of the Dutch bancassurance company SNS REAAL after a detailed assessment of the company's viability plan submitted by the Dutch authorities on 16 October 2009. On 10 December 2008, the Commission had approved the recapitalisation on a temporary basis as a rescue measure (see IP/08/1951 ). The plan confirms that SNS has a viable business model, while ensuring a sufficient own contribution of the company to the restructuring costs and limiting undue distortions of competition. The Commission therefore concluded that the aid was in line with its bank restructuring Communication (see IP/09/1180 ) and as such compatible with Article 107.3.b of the Treaty on the Functioning of the European Union (TFEU) that allows aid to remedy a serious disruption of a Member State's economy.

Competition Commissioner Neelie Kroes said: "The Commission’s assessment shows that SNS’s business model is viable. The state support received by SNS is of limited size and the financial projections submitted to the Commission show that thanks to a number of measures to reduce risks SNS is now in a position to face up to adverse economic conditions."

SNS REAAL is a Dutch bancassurance company created by the merger between SNS Bank and REAAL Insurance in 1997. The company mainly focuses on the Dutch retail and SME market.

In December 2008, the Dutch State injected €750 million in new capital in the form of core Tier 1 securities. The coupon of these instruments is set to be the higher of either 8.5% or an increasing percentage of the dividend paid on ordinary shares. The repurchase price of the securities is fixed at 150% of the issue price. One third of the securities can be repaid within 12 months at more favourable terms. Alternatively the securities can be converted into ordinary shares after three years from issuance. Simultaneously to the capital injection by the Dutch State, SNS REAAL Foundation, a strategic shareholder of SNS injected €500 million in the company.

The Commission temporarily approved the capital injection on 11 December 2008 (see IP/08/1951 ) as rescue aid. The approval was conditional upon the submission of a plan demonstrating the long-term viability of SNS within six months from the rescue decision.

In 2009 SNS successfully conducted a private capital increase allowing it to repay a first tranche of €185 million.

The viability plan refocuses SNS’s business model on its core activities in the Dutch retail and SME market. The plan aims at improving the risk profile of its insurance and banking business by reducing the size of its equity portfolio, entering into extra reinsurance contracts and improving its assets-and-liabilities management. Furthermore SNS has decided to gradually run-off its international property project finance activities.

The viability plan includes financial projections in a stress scenario and a sensitivity analysis testing to what extent the company's solvency would be impacted by adverse developments.

The Commission has assessed the submitted plan in view of its Communication on restructuring aid to banks (see IP/09/1180 ). The Commission analysed the company's financial projections and concluded that the measures described are able to restore the company's long-term viability. The Commission found that the company's shareholders and hybrid holders have significantly contributed to the restructuring and that the viability plan, taking into account the circumstances and the amount of the granted aid, limits as much as possible, distortions of competition brought about by the aid.

The non-confidential version of the decision will be made available under the case number N 371/2009 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 .

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