Brussels, 03/07/2014 (Agence Europe) - Following an in-depth investigation, the European Commission has concluded that a Belgian guarantee scheme for shareholders of financial cooperatives was incompatible with EU state aid rules. In particular, the guarantee conferred a selective advantage to the Belgian financial cooperative ARCO, the only beneficiary of the scheme, which now has to pay back the undue advantage it received.
The Belgian authorities contend that individual shareholders of financial cooperatives are in a situation similar to bank depositors. However, the Belgian legal framework for cooperative companies and the articles of association of the companies concerned make it clear that financial cooperatives are limited liability companies and unlimited liability companies. Contributions to their capital are made in the form of equity investments and are subject to equity risk. There would be no basis for considering such a measure compatible with EU rules on state aid. The Commission opened an investigation in 2012, which revealed that the public guarantee makes the financial cooperatives that benefit from it more attractive for investors as compared to their competitors and thus confers a selective advantage to its beneficiaries.
Belgium to appeal. Belgian Finance Minister Koen Geens issued a press release on Thursday 3 July stating that, according to the Belgian state's legal team, a European decision about state aid cannot decide to ban compensation for individual “cooperators” and therefore Belgium would not bow to any ban on payments to cooperators. He said that he would be lodging an appeal for annulment of the Commission's decision with the European Court of Justice or at least against the part of the decision banning payments. He said that a legally sound backing for savers must be high on the government's agenda so that the commitment made to cooperators can be respected. (EL)