Brussels, 18/11/2009 (Agence Europe) - On Wednesday 18 November, the European Commission approved restructuring plans submitted by British bank Lloyds, Dutch bank ING and Belgian bank KBC. “Nothing is free,” Competition Commissioner Neelie Kroes told press. After assessing support measures for the banking sector, she is now looking at how to restructure the sector in line with state aid rules (Article 87 para.3b of the Treaty). “We want a sound, viable banking system,” she said, hoping that banks will be able to help the long-term economy without being a burden for European taxpayers. In the three cases, the restructuring plans ensure that the banks assume some of the restructuring costs and remedy the competition distortion caused by the aid, while assuring their long-term viability.
The ING restructuring plan provides for the bank reducing the risk profile and complexity of its operations, and its selling its insurance activities and also one of its divisions (Westland Utrecht Hypotheekbank/Interadvies) to increase competition in the Dutch retail banking market. ING, equally, will not be allowed to acquire other companies for the time being or to exercise price leadership (to prevent a bank that has received state aid from making offers that other banks, which have received no such aid, cannot match). ING will also have to seek formal Commission approval for repaying hybrid and subordinated debt capital instruments.
The KBC restructuring plan provides for structural and financial restructuring through the divestment, run-down and listing of various businesses. These are mainly businesses not in line with its core banking and insurance activities, mainly in Central and Eastern Europe. KBC will also divest the Centea banking business and insurer Fidea in Belgium. The asset relief measure on a portfolio containing Collateralised Debt Obligations has proved to be in line with the Commission communication on Impaired Assets, the remuneration paid by KBC to the Belgian authorities being greater that that required according to the communication.
The Lloyds Banking Group's restructuring measures include the abandonment of all non-priority activities or current risk portfolios (mainly inherited from HBOS), as well as the adoption of prudent practices by Lloyds TSB in terms of risk management. The Lloyds Banking Group will also give up basic activities on the British banking retail market, which ought to facilitate the entry of new competitors onto the market, as well as the consolidation of the positions held by smaller competitors. Similarly, the Lloyds Banking Group exit tax for abandoning the British Asset Protection Scheme is also judged sufficiently high by the Commission. (A.B./transl.rh)