Brussels, 19/07/2007 (Agence Europe) - On Wednesday, the European Commission decided that the guarantee measures and a so-called “Put Option” in favour of the Czech Agrobanka Praha a.s. and GE Money Bank a.s. (former GE Capital Bank a.s.) are compatible with EC Treaty state aid rules and has closed its formal investigation procedure. Although the measures were granted before the Czech accession to the EU, the Commission has jurisdiction to rule on them as the potential financial exposure of the Czech State was not sufficiently defined at the date of accession (1 May 2004).
On 14 July 2004 the Commission decided to open formal investigation proceedings with respect to so-called “Warranties and Indemnities” and a “Put Option” (giving GE's parent company the right to sell all its shares in GE Capital Bank to the Czech National Bank under certain circumstances) agreed between the Czech National Bank and GE Capital in the course of the sale of the Czech bank Agrobanka to the Czech branch of GE Capital in 1998 (see EUROPE 8750). Since then, GE has waived certain warranties and indemnities.
Although it decided that the measures constitute state aid within the meaning of Article 87 (1) of the EC Treaty, the Commission's decision concludes that Agrobanka was not able to recover without state intervention and that the spirit of the then applicable Community guidelines on state aid for rescuing and restructuring firms in difficulty were respected, in particular because the bank had been sold via an open, unconditional and transparent tender procedure. (cd)