Brussels, 16/07/2004 (Agence Europe) - The European Commission has launched a formal probe into a series of state guarantees and a put option in favour of Agrobanka Praha, a.s. and its owner GE Capital.
The Czech Republic notified a series of measures in favour of Agrobanka Praha, a.s. and GE Capital Bank, a.s. under the interim mechanism procedure provided for in the Act of Accession. The notified measures were adopted by the Czech authorities during 1996 to 1998 to assist the restructuring of Agrobanka Praha, a.s. and facilitate its sale to GE Capital Bank. In general, the Commission considers a measure to be “applicable after” accession if the measure is liable to produce additional and unforeseeable benefits to individual companies or when the State's precise exposure cannot be calculated precisely at the time of accession. After a preliminary assessment the Commission decided to open formal investigation proceedings with respect to certain so-called “Warranties and Indemnities” and a “Put Option”. At this stage, the Commission considers that the potential liability of the State is not sufficiently defined, should GE Capital decide to exercise its put option. In conclusion, with respect to both measures the ultimate financial exposure of the Czech State is not sufficiently defined at the date of accession