Brussels, 31/03/2011 (Agence Europe) - On Thursday 31 March, the European Commission approved several measures in favour of Kommunalkredit Austria AG, which was nationalised in 2008 and split in 2009 into two bodies (Kommuinalkredit and Kommunalkredit Finanz) following the economic crisis. The Commission concluded that the restructuring plan is appropriate to restore the bank's viability, while adequately addressing competition distortions brought about by the state support. This consists inter alia of state guarantees of €10.6 billion, a capital injection of €250 million in the form of ordinary shares and a €1 billion non-refundable loan to Kommunalkredit Finanz, the entity winding down the non-strategic assets.
Under the restructuring plan, Kommunalkredit will concentrate on public and project finance lending and withdraw from other activities (securities, derivatives). It undertakes to restrict the annual growth of its total assets to maximum 2%, to reduce its balance sheet by approximately 60% compared to the old Kommunalkredit's balance sheet of the end of 2008 and to limit its new production of loans. The plan will also allow the bank's shareholders to make an appropriate contribution to restructuring costs. (F.G./transl.rt)