General Court Partly Annuls European Commission Decision On Restructuring Aid Granted To ING On Account Of The Financial Crisis

Author:Van Bael Bellis
Profession:Van Bael & Bellis

On 2 March 2012, the General Court ("GC") has partly upheld ING's appeal against a Commission decision of 2009 regarding various forms of aid granted by the Dutch State to the banking group ING in the context of the latter's restructuring plan during the financial crisis.

The ING group had benefited from three state aid measures implemented by the Dutch government during the financial crisis in 2008: (i) a capital injection of € 10 billion via hybrid securities without voting rights or dividend entitlement to which the Dutch State fully subscribed; (ii) an exchange of cash flows applied to impaired assets; and (iii) a number of public guarantees given on ING medium-term liabilities. In return for these support measures, ING submitted a restructuring plan providing for the separation of its insurance and investment activities, as well as the sale of its online banking activity in the US.

The terms on which the securities could be repurchased by ING were, however, amended a year later to the extent that the redemption premium was lowered. Such amendment was negotiated by the Dutch State to bring the conditions of the repayment plan into line with those imposed on two other Dutch banks.

In a decision dated 18 November 2009, the European Commission considered the three aid measures compatible with the common market, subject to a number of commitments, including a reduction of 45% in ING's balance sheet and a price leadership ban. In its assessment of the aid received, the Commission held in particular that ING received additional aid in the amount of approximately € 2 billion following the amendment to the repayment terms for the capital injection. The decision noted that the lowered redemption premium in the amended repayment terms amounted to an additional advantage to ING.

The Dutch State and ING contested the Commission's qualification of the modification of the capital injection repayment terms as additional aid before the GC. According to the GC, the Commission could not limit itself to finding that the amendment to...

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