Brussels, 12/05/2010 (Agence Europe) - The European Commission considers that the restructuring plan for the Carnegie Investment Bank has provided a satisfactory response to the problems that led to the bail-out of the bank in 2008, whilst avoiding undue distortions of competition. It therefore decided, on Wednesday 12 May, to grant final clearance for restructuring of the bank, granted by the Swedish government in October 2008, in the form of a rescue loan of SEK2.4 billion (€225 million).
The rescue loan had been granted by the Swedish authorities to help the group overcome serious difficulties caused, among other things, by flaws in the bank's credit risk management and compliance structure, exacerbated by the global financial crisis. With this loan, the Swedish government takes ownership of the bank and also of its sister company, the insurance broker Max Matthiessen.
The loan had been cleared by the Commission on 15 December 2008 as a temporary rescue measure, in application of its communication of 13 October 2008 on state aid for addressing the financial crisis, subject to a liquidation or restructuring plan being presented for end April 2009. “The bank's collapse could have entailed a real risk for the stability of the Swedish financial system as a whole”, Competition Commissioner Neelie Kroes had said at the time.
Sweden presented the Carnegie restructuring plan on 25 April 2009, after a call for tender to try to find new owners, which resulted, on 19 May 2009, in the sale of the business and of Matthiessen to investment funds Altor and Bure.
The Commission's investigation found that the rescue of Carnegie contained state subsidies, which improved the capital position of the bank and allowed it to remain on the market as a going concern, which had the potential to distort competition. However, the Commission concluded that Sweden had swiftly initiated restructuring measures to address the causes of the bank's difficulties and to ensure its viability. In particular, the risk management was reshuffled and losses were absorbed whilst providing adequate capital buffer. Moreover, the risk of moral hazard was addressed through an adequate contribution of the former owners of the bank to the cost of restructuring. Finally, the Commission found, with particular regard to the swift sale of the bank in a competitive tender, that the potential distortion of competition had been kept to a minimum.
The Commission consequently concluded that the restructuring aid in favour of Carnegie constituted state aid that can be considered compatible with Article 107(3)(b) TFEU, in light of the Commission's communication on the restructuring of banks during the crisis, which states that: - Commission aided banks must be made viable in the long term without further state support; - aided banks and their owners must carry a fair burden of the restructuring costs; - and measures must be taken to limit distortions of competition in the single market. (F.G./transl.rt)