Brussels, 02/04/2012 (Agence Europe) - On Friday 30 March, the European Commission approved a modification to Germany's and Commerzbank's commitment to divest the latter's largest subsidiary Eurohypo by the end of 2014. When it appeared that Eurohypo could not be divested because of its large funding needs and significant sovereign exposure, the German authorities proposed instead to run off most of Eurohypo's activities on Commerzbank's own balance sheet and to prolong the acquisition ban until March 2014. The Commission found the proposed alternative in line with EU state aid rules, in particular because it will limit undue distortions of competition.
Under the terms of the new commitments proposed, there will be a clear separation between Eurohypo's core and non-core activities. Non-core activities are public finance and parts of the “commercial real estate” (CRE) segment. Commerzbank will put the non-core activities in a fully separated restructuring unit, which will not be allowed to write new business but will concentrate on the orderly winding down of the activities over time. At the same time Commerzbank may continue a small part of Eurohypo's CRE business along with its own activities in four selected core countries, i.e. Germany, France, Poland and the United Kingdom. These activities will be reduced to €25 billion by 31 December 2013 and will remain curtailed until 31 December 2015. The implementation of the commitments will be monitored by an independent trustee.
The new commitments ensure that Eurohypo exits the market. The fact that Commerzbank is continuing limited Eurohypo's CRE business is compensated by the prolongation of the acquisition ban for all companies, including non-financial ones, for two additional years until the end of March 2014. This substantial extension ensures that Commerzbank will not acquire attractive businesses brought to the market through the general restructuring in the sector and allows other companies that did not receive state aid to buy such businesses. This will ensure that competition distortions are kept to the minimum. (FG/transl.fl)