The EC approved liquidation aid for the Agricultural Bank of Greece (ATE Bank)

Brussels, 6-5-2013 — /europawire.eu/ — The European Commission has concluded that liquidation aid granted by Greece in favour of Agricultural Bank of Greece (ATE Bank) was in line with EU state aid rules. In particular, the Commission found that the aid was limited to the minimum necessary to ensure an orderly resolution. In addition, the market exit of ATE Bank limits the distortions of competition brought about by the aid.

ATE Bank was resolved in July 2012 when, following a tender process, certain assets and liabilities (the ‘transferred activities’) were transferred to Piraeus Bank. The remaining assets and liabilities were put into a “bad bank” to be wound down.

The Commission found that this transfer to Piraeus Bank did not constitute State aid. Piraeus Bank had put in the best bid through a tender process.

However, the Commission found that three measures granted in favour of ATE Bank and of the transferred activities did contain State aid. The three measures are: (i) a recapitalisation of € 290 million granted in 2011, (ii) further aid of € 7,471 million to address the funding gap between assets and liabilities and (iii) a recapitalisation of € 570 million benefitting the transferred activities.

The Commission assessed whether those measures were in line with the common EU criteria for the restructuring and liquidation of banks in difficulty (see IP/09/1180). The Commission found that integration of the transferred activities into Piraeus Bank should ensure their viability in the long term, in particular in view of Greece’s commitments regarding the integration. Indeed, the integration will be monitored by an independent trustee and will also be part of the assessment of Piraeus Bank’s restructuring plan. Moreover, the aid granted in favour of the transferred activities was limited to the minimum necessary to make the transaction possible. Finally, the complete market exit of ATE bank limits the distortions of competition brought about by the aid.

Today’s decision is without prejudice to the Commission’s evaluation of the restructuring plan of Piraeus Bank.

Background

ATE Bank was the fifth largest bank in Greece with around two million customers. It had a market share of 16% in terms of branches and 8% in terms of total assets, with particularly strong market positions in the more rural parts of Greece. The Greek State was the bank’s main shareholder.

In May 2011, the Commission approved restructuring aid in favour of ATE (see IP/11/626). In the second half of 2011 the capital position of the bank deteriorated significantly. A number of options were examined to deal with the bank’s problems. Following this examination and taking account of the costs involved, it was considered that the transfer to Piraeus Bank was in the long term the best option for the Greek State. The transfer took place on 27 July 2012.

The non-confidential version of the current decision will be made available under the case number SA.35460 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.