Commission Decision
of 11 March 2014
on State aid SA.34445 (12/C) implemented by Denmark for the transfer of property-related assets from FIH to the FSC
(notified under document C(2014) 1280)
(Only the English text is authentic)
(Text with EEA relevance)
(2014/884/EU)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,
Whereas:
At the same time the Commission initiated the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (‘the Treaty’) because of doubts with regard to the appropriateness of the measures, the limitation of the aid to the minimum necessary and the own contribution of the bank, in particular in view of the potentially low remuneration of the impaired asset measures granted in favour of FIH.
On 3 February 2014 Denmark submitted a term sheet setting out the terms for the restructuring of FIH, which Denmark has committed to implement (the ‘commitments’).
The Danish authorities provided additional information during the period between 30 June 2012 and 3 February 2014.
FIH is a limited liability company regulated by the Danish banking legislation and supervised by the Danish Financial Supervisory Authority (‘FSA’). It was founded in 1958 and has its headquarters in Copenhagen, Denmark. It is wholly owned by FIH Holding A/S (‘FIH Holding’).
FIH is a focused niche bank specialising in medium-term financing as well as risk management advisory and corporate finance services for Danish enterprises with a balance sheet exceeding DKK 10 million (EUR 1,34 million). Originally FIH’s banking activities covered three segments: Property Finance, Acquisition Finance and Corporate Banking.
Though FIH Group had a pre-tax profit of DKK 316 million (EUR 42,5 million) in 2010, that profit was mainly driven by non-recurring positive market value adjustments, including unrealised gains on an indirect holding. In 2011 FIH Group reported a pre-tax loss of DKK 1,27 billion (EUR 170 million) due to impairment charges on loans and negative market value adjustments. On 31 December 2012 it had a pre-tax loss of DKK 47 million (EUR 6,4 million). For the end of 2013 a pre-tax profit of DKK 95 million (EUR 12,8 million) has been budgeted. In 2013 the third quarter net profit for continuing operations before taxation was DKK 23,2 million (EUR 3,09 million). For total operations after taxation FIH recorded a loss of DKK 20,1 million (EUR 2,71 million) in 2012.
The rating downgrade in 2011 was in line with the market prices at that time for FIH bonds that did not benefit from a government guarantee: FIH’s 2-4 year debt was priced at spreads of 600-700 basis points (‘bps’) over the equivalent maturity EURIBOR-linked swap.
With those State-guaranteed bonds maturing in 2012 and 2013, FIH was about to face a funding problem. The FSA estimated, in the second half of 2011, that there was a relatively high risk that FIH would be unable to comply with liquidity requirements in the following 12-18 months as a result of its expected inability to obtain funding from the open markets.
In order to address those emerging liquidity problems FIH was to carry out a substantial reduction of its balance sheet.
To solve the liquidity problems that FIH was then expected to face, in July 2012 Denmark proposed a complex impaired asset measure to transfer problematic property finance assets of FIH to a new subsidiary of FIH Holding (‘Newco’). At the same time, Denmark committed to provide funding and recapitalisation to Newco whenever needed.
In phase 1 there was a demerger of the assets and liabilities of FIH Erhvervsbank and FIH Kapital Bank into Newco, the new subsidiary owned by FIH Holding. The assets transferred to Newco were real estate loans and securities amounting to DKK 15,2 billion (EUR 2,1 billion) and derivatives of DKK 1,6 billion (EUR 215 million). The initial liabilities of Newco consisted of two loans (Loan One and Loan Two) with a remaining equity part of DKK 2 billion.
Loan Two was a loan from FIH Erhvervsbank to Newco of approximately DKK 13,45 billion (EUR 1,8 billion). As remuneration for Loan Two, Newco is to pay FIH the DKK CIBOR three-month rate plus 1,12 %. The maturity of Loan Two matches the maturity of loans which had previously been issued by FIH under the State guarantee. Loan Two and those matching loans thus fully matured in mid-2013 and it was contractually agreed that, as Newco repaid loans to FIH, FIH would repay outstanding loans that were guaranteed by the government. As the notional amount of Loan Two has been repaid by Newco to FIH, the FSC has provided funding to Newco in the amounts that were necessary to refinance Newco’s assets.
- (a)on 1 July 201230 FIH Holding gave an unlimited loss guarantee to the FSC guaranteeing that when resolving Newco the FSC would fully recover all its funding and the capital it had provided to Newco. Remuneration for that guarantee is included in the variable purchase price of the share purchase agreement;
- (b)
on 1 July 2012 the FSC committed to provide funding to Newco once Loan Two had matured (in mid-2013). The FSC receives interest from Newco equivalent to the EU Base rate plus 100 bps. To implement that commitment, the FSC has provided Newco with a DKK 13 billion (EUR 1,64 billion) loan facility for which it will not receive any facility fee;
- (c)
the FSC has committed to fund and recapitalise Newco if it is necessary to do so prior to the final winding-up process.
At Newco’s resolution, the FSC is contractually entitled to recover at least its initial DKK 2 billion investment net of costs incurred by FIH and the FSC in the transaction. If the winding-up process generates proceeds of less than the purchase price of DKK 2 billion, FIH will cover the difference by Loan One, the loss-absorbing loan, and by the guarantee respectively. If the proceeds of the winding-up process exceed DKK 1,5 billion, an additional 25 % of any excess amount will be paid to the FSC in addition to the DKK 2 billion minimal amount it is to receive. Any additional excess amount will be paid to FIH Holding. In practice, if the final proceeds are below DKK 1,5 billion, the FSC will obtain DKK 2 billion. if, for example, the final proceeds are DKK 1,9 billion, the FSC will receive DKK 2,1 billion.
In the Rescue and Opening Decision, the Commission raised doubts with regard to the proportionality of the measures, their limitation to the minimum necessary, whether there was an adequate own contribution by FIH Group and whether there was a sufficient limitation of the distortion of competition.
Further, at the time of the Rescue and Opening Decision FIH intended to aggressively enter the internet retail deposit market by pursuing a ‘price leadership’ role. That entry into the internet retail deposit market was a core component of FIH’s strategy to address its funding problems.
The restructuring plan is based on assumptions in respect of the evolution of gross domestic product (‘GDP’) growth as projected by the International Monetary Fund (‘IMF’), and the evolution of short- and mid-term interest rates changes as based on the Danish Ministry of Business and Growth’s estimate of developments in short-term interest rates until 2014. The plan assumes a moderate recovery of GDP growth in 2013 and thereafter.
In both cases there is a relatively low level of return on equity which is mainly due to the dividend ban and the ban on coupon payments foreseen in Denmark’s commitments made in the context of the State aid investigation. As a result of those commitments, FIH Group would retain profits until the end of the restructuring period and the settlement of the measures.
Originally FIH’s banking activities covered three segments: Property Finance, Acquisition Finance and Corporate Banking. The business segment Property Finance has been discontinued as part of FIH’s restructuring, as loans within Property Finance were sold to the FSC in 2012. In addition, the loans in its Acquisition Finance business unit will be phased out. Thus, Corporate Banking will be the only business unit to be continued. As of March 2013 the number of full-time employees was down to 214.
According to the restructuring plan the balance sheet was to decrease to DKK 27,68 billion (EUR 3,74 billion) by 31 December 2013. On 31 December 2016 FIH projects a total capital ratio of 19,6 %.
Over the restructuring period the total capital ratio is expected to amount to 19,6 % and the statutory liquidity ratio to 175 % and thus significantly exceed the regulatory requirements.
The situation of the bank has significantly improved since mid-2011 when the FSA anticipated that FIH would face major liquidity needs that it would be unable to meet. FIH repaid the remaining outstanding government-guaranteed bonds and the refinancing challenge was thus solved by 13 June 2013. In addition, FIH redeemed the government’s Tier 1 hybrid capital on 2 July 2013.
At present, FIH has no problems in meeting either its regulatory solvency or its liquidity requirements.
In order to address the concerns raised by the Commission in the context of the Rescue and Opening Decision, Denmark and FIH Group have taken a series of actions.
FIH paid, with value date 18 December 2013, an amount of DKK 61,7 million to Newco as partial repayment of fees received under the administration agreement for 2012, and retroactively reduced the management fees for administration and hedging for 2013 charged to Newco to 0,05 % of the outstanding loan portfolio.
FIH reduced its total assets from DKK 109,3 billion (EUR 14,67 billion) on 31 December 2010 to DKK 60,80 billion (EUR 8,16 billion) by 31 December 2012, corresponding to a decrease of 44 %.
FIH further reduced its loan book from DKK 58,0 billion (EUR 7,79 billion) on 31 December 2010 to DKK 16,2 billion (EUR 2,17 billion) by 31 December 2012, that is to say, by DKK 41,8 billion in total corresponding to a decrease of 72 %.
FIH reduced the number of its full-time employees from 356 at 31 December 2010 to 214 by 31 March 2013, which corresponds to a reduction of 41 %.
In addition, FIH has reduced its geographical presence as two of its four regional offices have been closed.
In view of the concerns raised by the Commission in the Rescue and Opening Decision and to ensure compatibility with the Impaired Assets Communication, in particular with regard to the proper remuneration of the asset transfer measures, Denmark has provided additional commitments which are set out in recitals 55 to 62.
FIH will reduce the management fees it makes to the FSC or make a lump sum payment to the FSC, with a present value of the reduction or of the payment equivalent to DKK 143,2 million (EUR 19,09 million).
In order to attain that outcome, FIH has paid an amount of DKK 61,7 million to Newco as a partial repayment of fees received by FIH from Newco under the administration agreement for 2012. FIH has also reduced the management fees for administration and hedging charged to Newco to 0,05 % on the outstanding loan portfolio for the year 2013.
In addition FIH will reduce the management fees for administration and hedging charged to Newco to 0,05 % per annum of the outstanding loan portfolio, from 1 January 2014.
FIH will pay an additional annual fee to the FSC of DKK 47,2 million (EUR 6,29 million) in the event that the FSA changes its regulatory stance as regards capital requirements at holding level so that FIH’s regulatory lending capacity would remain unrestricted by the capital position of FIH Holding.
The commitments also provide for a withdrawal of FIH from certain business lines (property finance, private equity, private wealth management) as well as for a set of behavioural restrictions including a price leadership ban for deposits, a ban on commercially aggressive practices and a ban on acquisitions, as well as for the liquidation of FIH Realkredit A/S which was the mortgage bank of FIH Group. FIH Realkredit A/S was liquidated in 2013.
- (a)
procedures were in place to establish the market price of the transfer;
- (b)
initial funding and guarantees were provided by FIH Group;
- (c)
FIH Group has to pay all transaction and winding-up costs; and
- (d)
FIH Group made additional commitments in connection with the transfer, in particular the obligation to submit a business plan.
On 7 June 2012, Denmark submitted a KPMG report assessing the measures by considering all contributing elements at the same time. KPMG saw ‘no reason to conclude that the terms of the agreement would not correspond to the risks for the FSC’, citing the high level of collateral, the potential use of covered bonds, the loss-absorbing loan and a 25 % earn-out for the FSC.
When the Commission informed Denmark about the expert assessment as regards the market value and real economic value of the measures, Denmark contested the results and submitted a number of questions and clarifications between 7 February and 11 September 2013.
Aside from the valuation aspects, Denmark noted the positive effects of the transfer on the regulatory position of FIH, in line with the goal of restoration of long-term viability contained in the restructuring plan.
Denmark also argued that FIH’s deposit acquisition strategy is independent of the State aid measure and does not convey the intention of a ‘price leadership’ role, but is an essential part of its funding strategy. Nevertheless, to alleviate the Commission’s concerns, Denmark has provided a commitment that FIH will adhere to a price leadership ban.
According to Article 107(1) of the Treaty, State aid is any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods, in so far as it affects trade between Member States.
The Commission considers that the measures in favour of FIH described in Section 2.3 should be considered together as a package. The measures are part of a single transaction as their elements are interdependent (chronologically and in terms of structure) and have been designed altogether in order to address FIH’s funding problem.
The measures described in Section 2.3 provide an advantage as they result in an asset relief for FIH, thus improving the group’s capital ratios, while at the same time enabling the bank to better address its funding problems.
The Danish authorities have argued that the measures respect the MEOP and hence do not constitute State aid to FIH Group.
The Commission will therefore assess whether the measures in favour of FIH Group fulfil the MEOP test. That test examines whether a market operator would have taken part in a given operation on the same terms and conditions as the public investor at the time when the decision to make public resources available was taken. There is no State aid when public funds are granted in circumstances and on terms which correspond to market conditions.
The most straightforward evidence showing that a transaction is in line with the MEOP is that the terms of the deal would not only be acceptable to a hypothetical market economy operator, but that there is actually such an operator participating in the same investment on the same terms as the State. The presence of other investors provides a benchmark for the Commission to make its assessment of the applicability of the MEOP.
At the time Denmark granted the measures, there was no market participant prepared to grant similar measures to FIH as those which were granted by entities under the control of the State. In particular, neither the consortium of owners nor any third party expressed any intention to invest in FIH. The Commission has no grounds to conclude that under those circumstances a market economy operator would be willing to participate in the measures. The absence of private interest is an indication of the financial difficulties and weak position of the bank.
In the absence of an operator investing on the same terms as the State, a measure can still be still free of aid, if in similar circumstances a private operator would have granted the same funding, asking a return at least as high as the return the State received. That assessment should, in principle, be based on a business plan taking into account available information and foreseeable developments at the time when the public funding was granted and it should not rely on any analysis based on a later situation.
In the absence of an actual private investor, to further check the applicability of the MEOP the Commission has to assess whether the overall return of the measures in favour of FIH is equal to or higher than the expected return that a hypothetical private investor would demand in order to make that investment. The expected return of the measures depends on the future stream of revenue from cash flows, which has to be discounted to the present day to derive its net present value (‘NPV’) using an appropriate rate of discount.
Graph 1 shows, for different liquidation values of Newco’s assets (from DKK 5,1 billion to DKK 28,3 billion), the NPV of the share purchase agreement. Each of the scenarios occurs with a probability indicated by the dotted line against the right-hand scale (0,1 % to 7,5 %). In the most likely scenarios, the return is slightly negative.
The fact that the terms of the measures were negotiated between the FSC and FIH Holding does not necessarily mean that the measures were executed on market terms. If Denmark intended to grant a substantial amount of additional aid to a bank facing grave liquidity difficulties, that fact alone would not exclude negotiations between the authorities and that bank on specific points of the transaction. Because of the bilateral aspect of the negotiation which took place, it lacked features such as those of an open non-discriminatory tender procedure or of a comparison to similar market transactions. Therefore, the conformity of the measures with market conditions does not follow automatically from the fact that negotiations occurred.
The Commission concludes that the measures in favour of FIH are not in line with the MEOP.
The use of the measures only concern FIH Group and Newco. The measure is therefore selective.
The measures helped FIH strengthen its capital and liquidity position compared to that of its competitors who will not benefit from similar measures. The measure therefore enabled FIH to improve its market position. The measure can therefore lead to a distortion of competition.
Given the integration of the banking market at European level, the advantage provided to FIH is felt by competitors both in Denmark (where banks from other Member States operate) and in other Member States. The measures must therefore be regarded as potentially affecting trade between Member States.
- (a)a benefit related to the share purchase agreement formula (DKK 0,73 billion)74;
- (b)a foregone equity investment remuneration (DKK 1,33 billion)75;
- (c)
excess interest payments by Newco on Loan One, the loss-absorbing loan, and the initial funding (DKK 0,33 billion); and
- (d)
excess administration fees (DKK 0,14 billion).
As a mitigating factor, the Commission considered the early cancellation of government guarantees amounting to DKK 0,28 billion should be deducted from the total aid amount.
- (a)
Denmark’s concern that the Commission would pay insufficient attention to at the economic reality of all aspects of the measures, such as the loss-absorbing loan; and
- (b)
the fact that not all elements of the transaction could be linked to a specific item in the remuneration formula.
Article 107(3)(b) of the Treaty provides that State aid may be considered to be compatible with the internal market where it is intended to ‘remedy a serious disturbance in the economy of a Member State’. Given the present circumstances and also the circumstances in the financial markets at the time of the Rescue and Opening Decision, the Commission considers that the measures may be examined under that provision.
The Commission accepts that the financial crisis has created exceptional circumstances in which the bankruptcy of one bank may undermine trust in the financial system at large, both at national and international level. That may be the case even for a small bank which is not in immediate difficulty but under tightened supervision by the financial regulator, such as FIH. The 2-4 year debt of that bank was priced at spreads of 600-700 bps over EURIBOR at the time of the Rescue and Opening Decision. That pricing level is a clear indication of imminent distress. In such cases, early intervention to avoid the institution concerned becoming unstable can be necessary to avoid threats to financial stability. It is particularly so in the case of a small economy such as Denmark where counterparts may tend not to distinguish between individual banks, thus extending the lack of confidence generated by the failure of one bank to the whole sector. Therefore, the legal basis for the compatibility assessment of all the measures covered by this Decision is Article 107(3)(b) of the Treaty.
As regards specifically the compatibility of the transfer of assets to the FSC, the Commission will assess the measures with regard to the Impaired Assets Communication.
The Commission will then assess the compatibility of the restructuring measures with regard to the Restructuring Communication.
The Impaired Assets Communication lays down the principles regarding the valuation and transfer of impaired assets and compatibility of measures with the Treaty. It has to be assessed whether the aid has been limited to the minimum and there is sufficient own contribution of the bank and its shareholders.
According to point 21 of the Impaired Assets Communication banks should bear the losses associated with impaired assets to the maximum extent. Point 21 requires a correct remuneration of the State for the asset relief measure, whatever its form, so as to ensure equivalent shareholder responsibility and burden-sharing irrespective of the exact model chosen.
In their original form, the measures provided for remuneration equal to the funding cost of the Danish government plus a mere 100 bps for the liquidity. No remuneration for the equity investment was foreseen, apart from a partial (25 %) upside in case the net resolution yields an excess through the price adjustment mechanism. Moreover, in a negative scenario where the asset portfolio of Newco would deteriorate significantly, compensation to the FSC would be provided by FIH Holding which, under those circumstances, would probably not have the capacity to honour its obligations. It seemed therefore unlikely, as stated in recitals 66 to 73 of the Rescue and Opening Decision, that the remuneration and own contribution would be sufficient to make the aid compatible with the internal market according to the guidance in the Impaired Assets Communication.
In line with point 39 of the Impaired Assets Communication, the Commission has therefore thoroughly analysed the market value of the measures. Aided by an external expert, it estimated a probabilistic distribution of outcomes for the Newco asset portfolio and calculated the effect on the likely terminal liquidation asset values through the share purchase agreement.
In its assessment, the Commission found advantages through foregone equity remuneration and potential losses linked to the credit quality of FIH Holding, excess interests for the loss-absorbing loan, excess spreads on funding to Newco by FIH and excess fees for administration and derivative hedging. The Commission also found mitigating factors such as the early cancellation of government guarantees. In total, the measures contained a State aid element of about DKK 2,25 billion.
Denmark commits that FIH will pay no dividends until the final settlement of the Newco accounts under the share purchase agreement, so as to mitigate the credit risk faced by FIH Holding for the FSC.
According to the Restructuring Communication, in order to be compatible with the internal market under Article 107(3)(b) of the Treaty, the restructuring of a financial institution in the context of the current financial crisis must: (i) lead to a restoration of the viability of the bank, or to the orderly winding-up thereof; (ii) ensure that the aid is limited to the minimum necessary and include sufficient own contribution by the beneficiary (burden-sharing); and (iii) contain sufficient measures limiting the distortion of competition.
According to the Restructuring Communication a Member State needs to provide a comprehensive restructuring plan which demonstrates how the long-term viability of the beneficiary will be restored without State aid within a reasonable period of time and within a maximum of five years. Long-term viability is achieved when a bank is able to compete in the marketplace for capital on its own merits in compliance with the relevant regulatory requirements. For a bank to do so, it must be able to cover all its costs and provide an appropriate return on equity, taking into account the risk profile of the bank. The return to viability should mainly derive from internal measures and be based on a credible restructuring plan.
The restructuring plan submitted by Denmark in respect of FIH covering the period up to 31 December 2016 shows a return to viability at the end of that restructuring period. The bank is expected to remain profitable and improve its yearly results in particular during the period 2013-2016, with an adequate return on equity on newly generated business. In a worst case scenario, the bank would still generate profits, with net profit improving from DKK 51 million (EUR 6,8 million) in 2013 to DKK 122 million (EUR 16,27 million) in 2016.
According to the restructuring plan, by 31 December 2016 the total capital ratio of FIH will be as high as 19,6 % and the statutory liquidity ratio then is expected to be 160 %. All those ratios exceed significantly the regulatory minimum requirements. The group therefore appears well capitalised and endowed with a comfortable liquidity position.
Following the measures, in particular the transfer of loans, FIH was a position not only to redeem the government-guaranteed bonds in 2013 in due time but also to repay on 2 July 2013 the hybrid capital it had received from the government.
In summary, with both profitability and liquidity assured, and a sufficient capital base FIH seems to be in a good position to attain long-term viability on a stand-alone basis.
The Commission does not usually use the concept of ‘normalised equity’ because it regularly leads to a higher return on equity than if the calculations were based on the actual equity. In this case, however, Denmark has given a commitment that FIH Holding and FIH will retain accumulated earnings to a high level, so as to better guarantee an appropriate payment to the FSC. In particular if Newco realises significantly lower proceeds than planned by FIH, FIH (via the loss-absorbing loan) and FIH Holding (via the guarantee given to the FSC) will bear costs to ensure the remuneration of the FIH at a level commensurate with the State aid rules. The accumulation of retained earnings nevertheless increases equity to a relatively high level (DKK 8,4 billion in the best case, DKK 7,3 billion in the worst case) which reduces the return on equity ratio. FIH is not in a position to counteract that process unless it produces losses (which is neither foreseen nor desirable). The concept of ‘normalised equity’ is therefore preferable in the current case to allow the Commission to assess properly the profitability of the bank, setting aside the results of the accumulation of retained earnings.
The Commission therefore considers that the restructuring plan is apt to restore FIH’s long-term viability.
FIH has committed not to pay any dividends during the restructuring phase and to repay a previous State recapitalisation of DKK 1,9 billion. Further, FIH will not make any coupon payments to investors in hybrid instruments or any instrument for which financial institutions have discretion to pay coupons or to call, regardless of their regulatory classification, including subordinated debt instruments, if no legal obligation to make payments exists.
In addition, as explained in Section 5.4.1, the remuneration of the impaired asset measures is set at an appropriate level.
The Commission therefore considers that the restructuring plan sufficiently addresses the burden-sharing requirement.
The restructuring plan provides for FIH to withdraw from certain business lines (property finance, private equity and private wealth management). In particular, DKK 15,4 billion of property finance assets (25 % of the 2012 balance sheet) have been hived off to Newco.
The amended term sheet also provides for a price leadership ban for deposits if the market share of FIH exceeds 5 %. That commitment allows FIH to further improve its funding position by raising deposits on the market while at the same time establishing a threshold preventing excessive practices. In addition, there will be a ban on commercial aggressive practices safeguarding competitors from excessive market behaviour. It should be noted that no market participant commented on FIH’s policy concerning deposit pricing after the Commission opened proceedings on that question.
Further, FIH will divest its investments in private equity funds and other equity investments and will no longer have a mortgage institute in its company structure after 31 December 2014. Thus, those business areas will also be left to competitors and the presence of FIH on the market reduced accordingly.
In addition, FIH has already reduced its total assets from DKK 109,3 billion (EUR 14,67 billion) on 31 December 2010 to DKK 60,80 billion (EUR 8,16 billion) by 31 December 2012, corresponding to a decrease of 44 %.
Altogether, those commitments lead to a sufficient mitigation of distortion of competition because business opportunities which could potentially be profitable for FIH will be abandoned and left to its competitors.
Following a detailed assessment of the elements and their links the Commission considers that that the remuneration FIH will pay for the measures serves as a sufficient own contribution and is in line with the Impaired Assets Communication. The Commission welcomes the ‘one-off’ payment (of DKK 310,25 million) to the FSC and the commitments made in that respect. The Commission notes further that the measures have improved the liquidity profile of the bank which, under all scenarios, remains liquid and viable according to the restructuring plan.
In the Rescue and Opening Decision the Commission expressed further doubts in relation to whether the requirement that distortion of competition be limited had been met. FIH is now subject to a coupon ban, a dividend ban, a price leadership ban (including for deposits) and a ban on commercial aggressive practices and is subject to divestment commitments.
Overall, the Commissions notes that the restructuring plan presented by Denmark adequately addresses the issues of viability, burden-sharing and distortion of competition, and hence it is in line with the requirements of the Restructuring Communication and Impaired Assets Communication.
Based on the assessment above the Commission finds that the measures are well-targeted, limited to the minimum and provide for limited distortion of competition. Therefore the Commission’s doubts related to the compatibility of the measures, initially raised in the Rescue and Opening Decision, have been allayed.
Based on the notification and in view of the commitments presented by Denmark it is concluded that the aid measures are compatible with the internal market. The appropriateness of the measures as well as the viability of the bank and own contributions together with the measures to mitigate distortion of competition appear sufficient. Consequently, the measures should be approved pursuant to Article 107(3)(b) of the Treaty and the opened proceedings should be closed,
HAS ADOPTED THIS DECISION: