# Official Journal L 168/2013

| | ISSN 1977-0677
  doi:10.3000/19770677.L_2013.168.eng |
| --- | --- |
| Official Journal
  of the European Union | L 168 |
| | |
| English edition | Legislation | Volume 5620 June 2013 |

ISSN 1977-0677

doi:10.3000/19770677.L_2013.168.eng

Official Journal

of the European Union

L 168

English edition

Legislation

Volume 5620 June 2013

---

| Contents | | II   Non-legislative acts | page |
| --- | --- | --- | --- |
| | | INTERNATIONAL AGREEMENTS |
| | | 2013/296/EU |
| | * | Council Decision of 13 May 2013 on the conclusion of the Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas | 1 |
| Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas | 3 |
| | | 2013/297/EU |
| | * | Council Decision of 13 May 2013 on the conclusion of the Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas | 10 |
| Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas | 11 |
| | | REGULATIONS |
| | * | Commission Implementing Regulation (EU) No 570/2013 of 17 June 2013 approving the active substance geraniol, in accordance with Regulation (EC) No 1107/2009 of the European Parliament and of the Council concerning the placing of plant protection products on the market, and amending the Annex to Implementing Regulation (EU) No 540/2011 (
  1
  ) | 18 |
| | | Commission Implementing Regulation (EU) No 571/2013 of 19 June 2013 establishing the standard import values for determining the entry price of certain fruit and vegetables | 23 |
| | | Commission Implementing Regulation (EU) No 572/2013 of 19 June 2013 on the issue of import licences for applications lodged during the first seven days of June 2013 under the tariff quotas opened by Regulation (EC) No 533/2007 for poultrymeat | 25 |
| | | Commission Implementing Regulation (EU) No 573/2013 of 19 June 2013 on the issue of import licences for applications lodged during the first seven days of June 2013 under the tariff quota opened by Regulation (EC) No 1385/2007 for poultrymeat | 27 |
| | | Commission Implementing Regulation (EU) No 574/2013 of 19 June 2013 fixing an allocation coefficient for available quantities of out-of-quota sugar to be sold on the Union market at reduced surplus levy during the 2012/2013 marketing year | 29 |
| | | DECISIONS |
| | | 2013/298/EU |
| | * | Commission Decision of 19 September 2012 on the State aid SA.31883 (2011/C) (ex N 516/10) which Austria implemented and is planning to implement for Österreichische Volksbanken AG
  (notified under document C(2012) 6307)

   (
  1
  ) | 30 |

Contents

II   Non-legislative acts

page

INTERNATIONAL AGREEMENTS

2013/296/EU

*

Council Decision of 13 May 2013 on the conclusion of the Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas

1

Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas

3

2013/297/EU

*

Council Decision of 13 May 2013 on the conclusion of the Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas

10

Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas

11

REGULATIONS

*

Commission Implementing Regulation (EU) No 570/2013 of 17 June 2013 approving the active substance geraniol, in accordance with Regulation (EC) No 1107/2009 of the European Parliament and of the Council concerning the placing of plant protection products on the market, and amending the Annex to Implementing Regulation (EU) No 540/2011 (
  1
  )

1

18

Commission Implementing Regulation (EU) No 571/2013 of 19 June 2013 establishing the standard import values for determining the entry price of certain fruit and vegetables

23

Commission Implementing Regulation (EU) No 572/2013 of 19 June 2013 on the issue of import licences for applications lodged during the first seven days of June 2013 under the tariff quotas opened by Regulation (EC) No 533/2007 for poultrymeat

25

Commission Implementing Regulation (EU) No 573/2013 of 19 June 2013 on the issue of import licences for applications lodged during the first seven days of June 2013 under the tariff quota opened by Regulation (EC) No 1385/2007 for poultrymeat

27

Commission Implementing Regulation (EU) No 574/2013 of 19 June 2013 fixing an allocation coefficient for available quantities of out-of-quota sugar to be sold on the Union market at reduced surplus levy during the 2012/2013 marketing year

29

DECISIONS

2013/298/EU

*

Commission Decision of 19 September 2012 on the State aid SA.31883 (2011/C) (ex N 516/10) which Austria implemented and is planning to implement for Österreichische Volksbanken AG
  (notified under document C(2012) 6307)

   (
  1
  )

(notified under document C(2012) 6307)

1

30

| | | |
| --- | --- | --- |
| | * | Notice to readers — Council Regulation (EU) No 216/2013 of 7 March 2013 on the electronic publication of the Official Journal of the European Union
  (see page 3 of the cover) | s3 |

*

Notice to readers — Council Regulation (EU) No 216/2013 of 7 March 2013 on the electronic publication of the Official Journal of the European Union
  (see page 3 of the cover)

Notice to readers — Council Regulation (EU) No 216/2013 of 7 March 2013 on the electronic publication of the Official Journal of the European Union

s3

| | |
| --- | --- |
| | (1)   Text with EEA relevance |

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(1)   Text with EEA relevance

1

| EN | Acts whose titles are printed in light type are those relating to day-to-day management of agricultural matters, and are generally valid for a limited period.
  The titles of all other Acts are printed in bold type and preceded by an asterisk. |
| --- | --- |

EN

Acts whose titles are printed in light type are those relating to day-to-day management of agricultural matters, and are generally valid for a limited period.

The titles of all other Acts are printed in bold type and preceded by an asterisk.

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II Non-legislative acts

INTERNATIONAL AGREEMENTS

| 20.6.2013 | EN | Official Journal of the European Union | L 168/1 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/1

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COUNCIL DECISION

of 13 May 2013

on the conclusion of the Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas

(2013/296/EU)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on European Union,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 77(2)(a), in conjunction with Article 218(6)(a), thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament,

Whereas:

| (1) | In accordance with Council Decision 2012/353/EU (1), the Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas (‘the Agreement’) was signed on 27 June 2012 subject to its conclusion. |
| --- | --- |

(1)

In accordance with Council Decision 2012/353/EU (1), the Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas (‘the Agreement’) was signed on 27 June 2012 subject to its conclusion.

| (2) | The Agreement should be approved. |
| --- | --- |

(2)

The Agreement should be approved.

| (3) | This Decision constitutes a development of the provisions of the Schengen acquis in which the United Kingdom does not take part, in accordance with Council Decision 2000/365/EC of 29 May 2000 concerning the request of the United Kingdom of Great Britain and Northern Ireland to take part in some of the provisions of the Schengen acquis (2); the United Kingdom is therefore not taking part in its adoption and is not bound by it or subject to its application. |
| --- | --- |

(3)

This Decision constitutes a development of the provisions of the Schengen acquis in which the United Kingdom does not take part, in accordance with Council Decision 2000/365/EC of 29 May 2000 concerning the request of the United Kingdom of Great Britain and Northern Ireland to take part in some of the provisions of the Schengen acquis (2); the United Kingdom is therefore not taking part in its adoption and is not bound by it or subject to its application.

| (4) | This Decision constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (3); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application. |
| --- | --- |

(4)

This Decision constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (3); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application.

| (5) | In accordance with Articles 1 and 2 of the Protocol (No 22) on the position of Denmark, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Denmark is not taking part in the adoption of this Decision and is not bound by it or subject to its application, |
| --- | --- |

(5)

In accordance with Articles 1 and 2 of the Protocol (No 22) on the position of Denmark, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Denmark is not taking part in the adoption of this Decision and is not bound by it or subject to its application,

HAS ADOPTED THIS DECISION:

Article 1

The Agreement between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas is hereby approved on behalf of the Union.

The text of the Agreement is attached to this Decision.

Article 2

The President of the Council shall designate the person empowered to proceed, on behalf of the European Union, to the notification provided for in Article 2 of the Agreement, in order to express the consent of the European Union to be bound by the Agreement (4).

Article 3

This Decision shall enter into force on the day of its adoption.

Done at Brussels, 13 May 2013.

For the Council

The President

S. COVENEY

---

(1)  
  OJ L 174, 4.7.2012, p. 4.

1

(2)  
  OJ L 131, 1.6.2000, p. 43.

2

(3)  
  OJ L 64, 7.3.2002, p. 20.

3

(4)  The date of entry into force of the Agreement will be published in the Official Journal of the European Union by the General Secretariat of the Council.

4

Official Journal of the European Union

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AGREEMENT

between the European Union and the Republic of Moldova amending the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas

THE EUROPEAN UNION,

and

THE REPUBLIC OF MOLDOVA,

hereinafter referred to as ‘the Parties’,

HAVING REGARD to the Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas which entered into force on 1 January 2008,

DESIRING to further facilitate people-to-people contacts,

RECOGNISING the importance of the introduction of a visa-free travel regime for the citizens of the Republic of Moldova in due course, provided that the conditions for well-managed and secure mobility are in place,

TAKING INTO ACCOUNT the Protocol on the Schengen acquis integrated into the framework of the European Union and the Protocol on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, and confirming that the provisions of this Agreement do not apply to the United Kingdom and Ireland,

TAKING INTO ACCOUNT the Protocol on the position of Denmark annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union and confirming that the provisions of this Agreement do not apply to Denmark,

HAVE AGREED AS FOLLOWS:

Article 1

The Agreement between the European Community and the Republic of Moldova on the facilitation of the issuance of visas, hereinafter referred to as the ‘Agreement’, shall be amended in accordance with the provisions of this Article:

| (1) | In the title, the word ‘Community’ shall be replaced by the word ‘Union’. |
| --- | --- |

(1)

In the title, the word ‘Community’ shall be replaced by the word ‘Union’.

| (2) | In Article 2(1) and (2) and in Article 3 point (e), the word ‘Community’ shall be replaced by the words ‘European Union’. |
| --- | --- |

(2)

In Article 2(1) and (2) and in Article 3 point (e), the word ‘Community’ shall be replaced by the words ‘European Union’.

| (3) | Article 4 paragraph 1 shall be amended as follows:






  (a) | Point (d) shall be replaced by the following:






  ‘(d) | for drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in the Republic of Moldova:






  — | a written request from the national association of carriers of the Republic of Moldova providing for international road transportation, stating the purpose, itinerary, duration and frequency of the trips;’; |
| --- | --- | --- | --- | --- |

(3)

Article 4 paragraph 1 shall be amended as follows:

(a)

Point (d) shall be replaced by the following:

‘(d)

for drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in the Republic of Moldova:

—

a written request from the national association of carriers of the Republic of Moldova providing for international road transportation, stating the purpose, itinerary, duration and frequency of the trips;’;

| (b) | Point (f) shall be replaced by the following:






  ‘(f) | for journalists and the technical crew accompanying them in a professional capacity:






  — | certificate or other document issued by a professional organisation or the applicant’s employer proving that the person concerned is a qualified journalist and stating that the purpose of the journey is to carry out journalistic work or proving that the person is a member of the technical crew accompanying the journalist in a professional capacity;’; |
| --- | --- | --- | --- |

(b)

Point (f) shall be replaced by the following:

‘(f)

for journalists and the technical crew accompanying them in a professional capacity:

—

certificate or other document issued by a professional organisation or the applicant’s employer proving that the person concerned is a qualified journalist and stating that the purpose of the journey is to carry out journalistic work or proving that the person is a member of the technical crew accompanying the journalist in a professional capacity;’;

| (c) | Point (k) shall be replaced by the following:






  ‘(k) | for close relatives – spouse, children (including adopted children), parents (including custodians), grandparents and grandchildren – visiting citizens of the Republic of Moldova legally residing in the territory of the Member States, or citizens of the European Union residing in the territory of the Member State of which they are nationals:






  — | a written request from the host person;’; |
| --- | --- | --- | --- |

(c)

Point (k) shall be replaced by the following:

‘(k)

for close relatives – spouse, children (including adopted children), parents (including custodians), grandparents and grandchildren – visiting citizens of the Republic of Moldova legally residing in the territory of the Member States, or citizens of the European Union residing in the territory of the Member State of which they are nationals:

—

a written request from the host person;’;

| (d) | The following point shall be added:






  ‘(p) | for participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI):






  — | a written request by the host organisation.’. |
| --- | --- | --- | --- |

(d)

The following point shall be added:

‘(p)

for participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI):

—

a written request by the host organisation.’.

| (4) | In Article 5, paragraphs 1 to 3 shall be replaced by the following:

  ‘1.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with a term of validity of five years to the following categories of persons:






  (a) | members of national and regional Governments and Parliaments, of the Constitutional Court and Supreme Court if they are not exempted from the visa requirement by this Agreement, in the exercise of their duties; |
| --- | --- | --- |

(4)

In Article 5, paragraphs 1 to 3 shall be replaced by the following:

‘1.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with a term of validity of five years to the following categories of persons:

(a)

members of national and regional Governments and Parliaments, of the Constitutional Court and Supreme Court if they are not exempted from the visa requirement by this Agreement, in the exercise of their duties;

| (b) | permanent members of official delegations who, following an official invitation addressed to the Republic of Moldova, are to participate regularly in meetings, consultations, negotiations or exchange programs, as well as in events held in the territory of the Member States by intergovernmental organisations; |
| --- | --- |

(b)

permanent members of official delegations who, following an official invitation addressed to the Republic of Moldova, are to participate regularly in meetings, consultations, negotiations or exchange programs, as well as in events held in the territory of the Member States by intergovernmental organisations;

| (c) | spouses and children (including adopted children), who are under the age of 21 or are dependent, and parents (including custodians) visiting citizens of the Republic of Moldova legally residing in the territory of the Member States or citizens of the European Union residing in the territory of the Member State of which they are nationals; |
| --- | --- |

(c)

spouses and children (including adopted children), who are under the age of 21 or are dependent, and parents (including custodians) visiting citizens of the Republic of Moldova legally residing in the territory of the Member States or citizens of the European Union residing in the territory of the Member State of which they are nationals;

| (d) | business people and representatives of business organisations who regularly travel to the Member States; |
| --- | --- |

(d)

business people and representatives of business organisations who regularly travel to the Member States;

| (e) | journalists and the technical crew accompanying them in a professional capacity. |
| --- | --- |

(e)

journalists and the technical crew accompanying them in a professional capacity.

By way of derogation from the first subparagraph, where the need or the intention to travel frequently or regularly is manifestly limited to a shorter period, the term of validity of the multiple-entry visa shall be limited to that period, in particular where

| — | in the case of the persons referred to in point (a), the term of office, |
| --- | --- |

—

in the case of the persons referred to in point (a), the term of office,

| — | in the case of the persons referred to in point (b), the term of the validity of the status as a permanent member of an official delegation, |
| --- | --- |

—

in the case of the persons referred to in point (b), the term of the validity of the status as a permanent member of an official delegation,

| — | in the case of the persons referred to in point (c), the period of validity of the authorisation for legal residence of citizens of the Republic of Moldova legally residing in the European Union, |
| --- | --- |

—

in the case of the persons referred to in point (c), the period of validity of the authorisation for legal residence of citizens of the Republic of Moldova legally residing in the European Union,

| — | in the case of the persons referred to in point (d), the term of validity of the status as a representative of the business organisation or the work contract, or |
| --- | --- |

—

in the case of the persons referred to in point (d), the term of validity of the status as a representative of the business organisation or the work contract, or

| — | in the case of the persons referred to in point (e), the work contract |
| --- | --- |

—

in the case of the persons referred to in point (e), the work contract

is less than five years.

2.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with a term of validity of one year to the following categories of persons, provided that during the previous year they have obtained at least one visa, have made use of it in accordance with the laws on entry and stay of the visited State:

| (a) | members of official delegations who, following an official invitation addressed to the Republic of Moldova, are to participate regularly in meetings, consultations, negotiations or exchange programs, as well as in events held in the territory of the Member States by intergovernmental organisations; |
| --- | --- |

(a)

members of official delegations who, following an official invitation addressed to the Republic of Moldova, are to participate regularly in meetings, consultations, negotiations or exchange programs, as well as in events held in the territory of the Member States by intergovernmental organisations;

| (b) | representatives of civil society organisations travelling regularly to Member States for the purposes of educational training, seminars or conferences, including in the framework of exchange programmes; |
| --- | --- |

(b)

representatives of civil society organisations travelling regularly to Member States for the purposes of educational training, seminars or conferences, including in the framework of exchange programmes;

| (c) | members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events who regularly travel to the Member States; |
| --- | --- |

(c)

members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events who regularly travel to the Member States;

| (d) | drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in the Republic of Moldova; |
| --- | --- |

(d)

drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in the Republic of Moldova;

| (e) | members of train, refrigerator and locomotive crews in international trains travelling to the territories of the Member States; |
| --- | --- |

(e)

members of train, refrigerator and locomotive crews in international trains travelling to the territories of the Member States;

| (f) | persons participating in scientific, cultural and artistic activities, including university and other exchange programs, who regularly travel to the Member States; |
| --- | --- |

(f)

persons participating in scientific, cultural and artistic activities, including university and other exchange programs, who regularly travel to the Member States;

| (g) | students and post-graduate students who regularly travel for the purposes of study or educational training, including in the framework of exchange programmes; |
| --- | --- |

(g)

students and post-graduate students who regularly travel for the purposes of study or educational training, including in the framework of exchange programmes;

| (h) | participants in international sports events and persons accompanying them in a professional capacity; |
| --- | --- |

(h)

participants in international sports events and persons accompanying them in a professional capacity;

| (i) | participants in official exchange programmes organised by twin cities or other localities; |
| --- | --- |

(i)

participants in official exchange programmes organised by twin cities or other localities;

| (j) | participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI). |
| --- | --- |

(j)

participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI).

By way of derogation from the first subparagraph, where the need or the intention to travel frequently or regularly is manifestly limited to a shorter period, the term of validity of the multiple-entry visa shall be limited to that period.

3.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with a term of validity of a minimum of two years and a maximum of five years to the categories of persons referred to in paragraph 2, provided that during the previous two years they have made use of the one year multiple-entry visas in accordance with the laws on entry and stay of the visited State unless the need or the intention to travel frequently or regularly is manifestly limited to a shorter period, in which case the term of validity of the multiple-entry visa shall be limited to that period.’.

| (5) | Article 6 shall be amended as follows:






  (a) | In paragraph 2,






  (i) | the introductory words shall be replaced by the following:

  ‘2.   Without prejudice to paragraph 4 fees for processing the visa application are waived for the following categories of persons:’; |
| --- | --- | --- | --- |

(5)

Article 6 shall be amended as follows:

(a)

In paragraph 2,

(i)

the introductory words shall be replaced by the following:

‘2.   Without prejudice to paragraph 4 fees for processing the visa application are waived for the following categories of persons:’;

| (ii) | in point (a), the following words shall be added:

  ‘or citizens of the European Union residing in the territory of the Member State of which they are nationals’; |
| --- | --- |

(ii)

in point (a), the following words shall be added:

‘or citizens of the European Union residing in the territory of the Member State of which they are nationals’;

| (iii) | in point (j), the following words shall be added:

  ‘and the technical crew accompanying them in a professional capacity’; |
| --- | --- |

(iii)

in point (j), the following words shall be added:

‘and the technical crew accompanying them in a professional capacity’;

| (iv) | the following points shall be added:






  ‘(p) | participants aged 25 years or less in seminars, conferences, sports, cultural or educational events, organised by non profit organisations; |
| --- | --- | --- |

(iv)

the following points shall be added:

‘(p)

participants aged 25 years or less in seminars, conferences, sports, cultural or educational events, organised by non profit organisations;

| (q) | representatives of civil society organisations undertaking trips for purposes of educational training, seminars, conferences, including in the framework of exchange programmes; |
| --- | --- |

(q)

representatives of civil society organisations undertaking trips for purposes of educational training, seminars, conferences, including in the framework of exchange programmes;

| (r) | participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI).’; |
| --- | --- |

(r)

participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI).’;

| (v) | the following subparagraph shall be added:
  ‘The first subparagraph shall apply also where the purpose of the journey is transit.’; |
| --- | --- |

(v)

the following subparagraph shall be added:

‘The first subparagraph shall apply also where the purpose of the journey is transit.’;

| (b) | The following paragraph shall be added:

  ‘4.   If a Member State cooperates with an external service provider in view of issuing a visa the external service provider may charge a service fee. This fee shall be proportionate to the costs incurred by the external service provider while performing its tasks and shall not exceed EUR 30. The Member States shall maintain the possibility for all applicants to lodge their applications directly at their consulates. The external service provider shall conduct its operations in accordance with the Visa Code and in full respect of Moldovan legislation.’. |
| --- | --- |

(b)

The following paragraph shall be added:

‘4.   If a Member State cooperates with an external service provider in view of issuing a visa the external service provider may charge a service fee. This fee shall be proportionate to the costs incurred by the external service provider while performing its tasks and shall not exceed EUR 30. The Member States shall maintain the possibility for all applicants to lodge their applications directly at their consulates. The external service provider shall conduct its operations in accordance with the Visa Code and in full respect of Moldovan legislation.’.

| (6) | The following Article shall be inserted:

  ‘Article 6a
  Lodging of an application without the presence of the applicant
  Member States consulates may waive the requirement to appear in person, when the applicant is known to them for his integrity and reliability, unless the applicant is required to appear in person for the collection of biometric identifiers.’. |
| --- | --- |

(6)

The following Article shall be inserted:

‘Article 6a

Lodging of an application without the presence of the applicant

Member States consulates may waive the requirement to appear in person, when the applicant is known to them for his integrity and reliability, unless the applicant is required to appear in person for the collection of biometric identifiers.’.

| (7) | Article 8 shall be replaced by the following:

  ‘Article 8
  Departure in the case of lost or stolen documents
  Citizens of the European Union and citizens of the Republic of Moldova who have lost their identity documents, or from whom those documents have been stolen while staying in the territory of the Republic of Moldova or of the Member States, may leave the territory of the Republic of Moldova or of the Member States on the basis of valid identity documents entitling them to cross the border issued by diplomatic missions or consular posts of the Member States or of the Republic of Moldova without any visa or other authorisation.’. |
| --- | --- |

(7)

Article 8 shall be replaced by the following:

‘Article 8

Departure in the case of lost or stolen documents

Citizens of the European Union and citizens of the Republic of Moldova who have lost their identity documents, or from whom those documents have been stolen while staying in the territory of the Republic of Moldova or of the Member States, may leave the territory of the Republic of Moldova or of the Member States on the basis of valid identity documents entitling them to cross the border issued by diplomatic missions or consular posts of the Member States or of the Republic of Moldova without any visa or other authorisation.’.

| (8) | Article 10 shall be amended as follows:






  (a) | The title shall be replaced by the following:


  ‘Diplomatic and service passports’; |
| --- | --- | --- |

(8)

Article 10 shall be amended as follows:

(a)

The title shall be replaced by the following:

‘Diplomatic and service passports’;

‘Diplomatic and service passports’;

| (b) | Paragraph 2 shall be replaced by the following:

  ‘2.   Citizens of the Republic of Moldova, holders of valid biometric service passports can enter, leave and transit through the territories of the Member States without visas.’; |
| --- | --- |

(b)

Paragraph 2 shall be replaced by the following:

‘2.   Citizens of the Republic of Moldova, holders of valid biometric service passports can enter, leave and transit through the territories of the Member States without visas.’;

| (c) | The following paragraph shall be added:

  ‘3.   Persons mentioned in paragraphs 1 and 2 may stay in the territories of the Member States for a period not exceeding 90 days per period of 180 days.’. |
| --- | --- |

(c)

The following paragraph shall be added:

‘3.   Persons mentioned in paragraphs 1 and 2 may stay in the territories of the Member States for a period not exceeding 90 days per period of 180 days.’.

| (9) | Article 12(1) shall be amended as follows:






  (a) | In the first sentence, the word ‘Community’ shall be replaced by the word ‘Union’; |
| --- | --- | --- |

(9)

Article 12(1) shall be amended as follows:

(a)

In the first sentence, the word ‘Community’ shall be replaced by the word ‘Union’;

| (b) | In the second sentence, the word ‘Community’ shall be replaced by the words ‘European Union’ and the words ‘Commission of the European Communities’ by the words ‘European Commission’. |
| --- | --- |

(b)

In the second sentence, the word ‘Community’ shall be replaced by the words ‘European Union’ and the words ‘Commission of the European Communities’ by the words ‘European Commission’.

| (10) | Article 13 shall be amended as follows:






  (a) | The existing paragraph shall be numbered as paragraph 1; |
| --- | --- | --- |

(10)

Article 13 shall be amended as follows:

(a)

The existing paragraph shall be numbered as paragraph 1;

| (b) | The following paragraph shall be added:

  ‘2.   The provisions of bilateral Agreements or arrangements between individual Member States and the Republic of Moldova concluded before the entry into force of this Agreement providing for the exemption of the holders of non-biometric service passports from the visa requirement shall continue to apply without prejudice to the right of the Member States concerned or the Republic of Moldova to denounce or suspend these bilateral agreements or arrangements.’. |
| --- | --- |

(b)

The following paragraph shall be added:

‘2.   The provisions of bilateral Agreements or arrangements between individual Member States and the Republic of Moldova concluded before the entry into force of this Agreement providing for the exemption of the holders of non-biometric service passports from the visa requirement shall continue to apply without prejudice to the right of the Member States concerned or the Republic of Moldova to denounce or suspend these bilateral agreements or arrangements.’.

| (11) | In Article 14, the following first paragraph shall be inserted:
  ‘The Republic of Moldova may only reintroduce the visa requirement for citizens or certain categories of citizens of all Member States and not for citizens or certain categories of citizens of individual Member States.’. |
| --- | --- |

(11)

In Article 14, the following first paragraph shall be inserted:

‘The Republic of Moldova may only reintroduce the visa requirement for citizens or certain categories of citizens of all Member States and not for citizens or certain categories of citizens of individual Member States.’.

Article 2

This Agreement shall be ratified or approved by the Parties in accordance with their respective procedures and shall enter into force on the first day of the second month following the date on which the last Party notifies the other that the procedures referred to above have been completed.

Done at Brussels on the twenty-seventh day of June in the year two thousand and twelve, in duplicate in the official languages of the Parties, each of these texts being equally authentic.

За Европейския съюз

Por la Unión Europea

Za Evropskou unii

For Den Europæiske Union

Für die Europäische Union

Euroopa Liidu nimel

Για την Ευρωπαϊκή Ένωση

For the European Union

Pour l'Union européenne

Per l'Unione europea

Eiropas Savienības vārdā –

Europos Sąjungos vardu

Az Európai Unió részéről

Għall-Unjoni Ewropea

Voor de Europese Unie

W imieniu Unii Europejskiej

Pela União Europeia

Pentru Uniunea Europeană

Za Európsku úniu

Za Evropsko unijo

Euroopan unionin puolesta

För Europeiska unionen

Pentru Uniunea Europeană

Image 1

Image 2

3a Република Молдова

Por la República de Moldavia

Za Moldavskou republiku

For Republikken Moldova

Für die Republik Moldau

Moldova Vabariigi nimel

Για τη Δημοκρατία της Μολδαβίας

For the Republic of Moldova

Pour la République de Moldavie

Per la Repubblica moldova

Moldovas Republikas vārdā –

Moldovos Respublikos vardu

A Moldovai Köztársaság részéről

Għar-Repubblika tal-Moldova

Voor de Republiek Moldavië

W imieniu Republiki Mołdawii

Pela República da Moldova

Pentru Republica Moldova

Za Moldavskú republiku

Za Republiko Moldavijo

Moldovan tasavallan puolesta

För Republiken Moldavien

Pentru Republica Moldova

Image 3

JOINT DECLARATION ON COOPERATION ON TRAVEL DOCUMENTS

The Parties agree that the Joint Committee established pursuant to Article 12 of the Agreement, when monitoring the implementation of the Agreement, should evaluate the impact of the level of security of the respective travel documents on the functioning of the Agreement. To that end, the Parties agree to regularly inform each other about the measures taken for avoiding the proliferation of travel documents, developing the technical aspects of travel document security as well as regarding the personalisation process of the issuance of travel documents.

EUROPEAN UNION DECLARATION ON DOCUMENTS TO BE SUBMITTED WHEN APPLYING FOR SHORT-STAY VISAS

The European Union will establish a harmonised list of supporting documents, in accordance with Article 48 paragraph 1 lit. a of the Visa Code, in order to ensure that applicants from the Republic of Moldova are required to submit, in principle, the same supporting documents. The European Union will inform the Republic of Moldova in the Committee, when such a list has been established. The European Union will also inform the citizens of the Republic of Moldova in accordance with Article 47 paragraph 1 lit. a of the Visa Code.

EUROPEAN UNION DECLARATION ON COOPERATION WITH EXTERNAL SERVICE PROVIDERS

The European Union commits itself to outsource the reception of visa applications only as a last resort, when there are particular circumstances or reasons relating to the local situation, such as where the high number of applicants does not allow the collection of applications and of data to be organised in a timely manner and in decent conditions; or it is not possible to ensure a good territorial coverage of the third country concerned in any other way; and where other forms of cooperation prove not to be appropriate for the Member State concerned.

EUROPEAN UNION DECLARATION ON FACILITATIONS FOR FAMILY MEMBERS

The European Union takes note of the suggestion of the Republic of Moldova to give a wider definition to the notion of family members that should benefit from visa facilitation as well as of the importance that the Republic of Moldova attaches to the simplification of movement of this category of persons.

In order to ease the mobility of an extended number of persons which have family links (in particular sisters and brothers and their children) with citizens of the Republic of Moldova legally residing in the territories of Member States or with citizens of the European Union residing in the territory of the Member State of which they are nationals, the European Union invites the Member States’ consular offices to make full use of the existing possibilities in the Visa Code for facilitating the issuance of visas to this category of persons, including in particular, the simplification of documentary evidence requested for the applicants, exemptions from handling fees and, where appropriate, the issuing of multiple-entry visas.

JOINT DECLARATION CONCERNING SWITZERLAND AND LIECHTENSTEIN

The Parties take note of the close relationship between the Union and Switzerland and Liechtenstein, particularly by virtue of the Agreement of 26 October 2004 concerning the association of these countries with the implementation, application and development of the Schengen acquis.

acquis

In such circumstances, it is desirable that the authorities of Switzerland and Liechtenstein and the Republic of Moldova conclude, without delay, bilateral agreements on the facilitation of the issuance of short-stay visas in similar terms as the amended Agreement.

---

| 20.6.2013 | EN | Official Journal of the European Union | L 168/10 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/10

---

COUNCIL DECISION

of 13 May 2013

on the conclusion of the Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas

(2013/297/EU)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on European Union,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 77(2)(a), in conjunction with Article 218(6)(a), thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament,

Whereas:

| (1) | In accordance with Council Decision 2012/428/EU (1), the Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas (‘the Agreement’) was signed on 23 July 2012, subject to its conclusion. |
| --- | --- |

(1)

In accordance with Council Decision 2012/428/EU (1), the Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas (‘the Agreement’) was signed on 23 July 2012, subject to its conclusion.

| (2) | The Agreement should be approved. |
| --- | --- |

(2)

The Agreement should be approved.

| (3) | This Decision constitutes a development of the provisions of the Schengen acquis in which the United Kingdom does not take part, in accordance with Council Decision 2000/365/EC of 29 May 2000 concerning the request of the United Kingdom of Great Britain and Northern Ireland to take part in some of the provisions of the Schengen acquis (2); the United Kingdom is therefore not taking part in its adoption and is not bound by it or subject to its application. |
| --- | --- |

(3)

This Decision constitutes a development of the provisions of the Schengen acquis in which the United Kingdom does not take part, in accordance with Council Decision 2000/365/EC of 29 May 2000 concerning the request of the United Kingdom of Great Britain and Northern Ireland to take part in some of the provisions of the Schengen acquis (2); the United Kingdom is therefore not taking part in its adoption and is not bound by it or subject to its application.

| (4) | This Decision constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (3); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application. |
| --- | --- |

(4)

This Decision constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (3); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application.

| (5) | In accordance with Articles 1 and 2 of the Protocol (No 22) on the position of Denmark, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Denmark is not taking part in the adoption of this Decision and is not bound by it or subject to its application, |
| --- | --- |

(5)

In accordance with Articles 1 and 2 of the Protocol (No 22) on the position of Denmark, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Denmark is not taking part in the adoption of this Decision and is not bound by it or subject to its application,

HAS ADOPTED THIS DECISION:

Article 1

The Agreement between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas is hereby approved on behalf of the Union.

The text of the Agreement is attached to this Decision.

Article 2

The President of the Council shall designate the person(s) empowered to proceed, on behalf of the Union, to the notification provided for in Article 2 of the Agreement, in order to express the consent of the Union to be bound by the Agreement (4).

Article 3

This Decision shall enter into force on the day of its adoption.

Done at Brussels, 13 May 2013.

For the Council

The President

S. COVENEY

---

(1)  
  OJ L 199, 26.7.2012, p. 1.

1

(2)  
  OJ L 131, 1.6.2000, p. 43.

2

(3)  
  OJ L 64, 7.3.2002, p. 20.

3

(4)  The date of entry into force of the Agreement will be published in the Official Journal of the European Union by the General Secretariat of the Council.

4

Official Journal of the European Union

---

AGREEMENT

between the European Union and Ukraine amending the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas

THE EUROPEAN UNION,

of the one part, and

UKRAINE,

of the other part,

hereinafter referred to as ‘the Parties’,

HAVING REGARD to the Agreement between the European Community and Ukraine on the facilitation of the issuance of visas, which entered into force on 1 January 2008,

DESIRING to further facilitate people to people contacts,

RECOGNISING the importance of the introduction of a visafree travel regime for the citizens of Ukraine in due course, provided that the conditions for well-managed and secure mobility are in place,

TAKING INTO ACCOUNT the entry into force of Regulation (EC) No 810/2009 of the European Parliament and of the Council of 13 July 2009 establishing a Community Code on Visas (Visa Code) (1), which, in particular provides for the obligatory motivation of a visa refusal and the right to appeal for applicants in case of refusal,

TAKING INTO ACCOUNT the Protocol on the Schengen acquis integrated into the framework of the European Union and the Protocol on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice and, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, and confirming that the provisions of this Agreement do not apply to the United Kingdom and Ireland,

TAKING INTO ACCOUNT the Protocol on the position of Denmark annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union and confirming that the provisions of this Agreement do not apply to Denmark,

HAVE AGREED AS FOLLOWS:

Article 1

The Agreement between the European Community and Ukraine on the facilitation of the issuance of visas, hereinafter referred to as ‘the Agreement’, shall be amended in accordance with the provisions of this Article:

| (1) | In the title, the word ‘Community’ shall be replaced by the word ‘Union’. |
| --- | --- |

(1)

In the title, the word ‘Community’ shall be replaced by the word ‘Union’.

| (2) | In Article 1(2), the following first subparagraph shall be inserted:
  Ukraine may only reintroduce the visa requirement for citizens or certain categories of citizens of all Member States and not for citizens or certain categories of citizens of individual Member States. |
| --- | --- |

(2)

In Article 1(2), the following first subparagraph shall be inserted:

Ukraine may only reintroduce the visa requirement for citizens or certain categories of citizens of all Member States and not for citizens or certain categories of citizens of individual Member States.

| (3) | In Article 2(1) and (2), the word ‘Community’ shall be replaced by the words ‘European Union’. |
| --- | --- |

(3)

In Article 2(1) and (2), the word ‘Community’ shall be replaced by the words ‘European Union’.

| (4) | In Article 3 point (e), the word ‘Community’ shall be replaced by the words ‘European Union’. |
| --- | --- |

(4)

In Article 3 point (e), the word ‘Community’ shall be replaced by the words ‘European Union’.

| (5) | Article 4(1) shall be amended as follows:






  (a) | point (c) shall be replaced by the following:






  ‘(c) | for drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in Ukraine:






  — | a written request from the national association of carriers of Ukraine providing for international road transportation, stating the purpose, duration, destination(s), and frequency of the trips;’; |
| --- | --- | --- | --- | --- |

(5)

Article 4(1) shall be amended as follows:

(a)

point (c) shall be replaced by the following:

‘(c)

for drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in Ukraine:

—

a written request from the national association of carriers of Ukraine providing for international road transportation, stating the purpose, duration, destination(s), and frequency of the trips;’;

| (b) | point (e) shall be replaced by the following:






  ‘(e) | for journalists and the technical crew accompanying them in a professional capacity:






  — | a certificate or other document issued by a professional organisation or the applicant’s employer proving that the person concerned is a qualified journalist and stating that the purpose of the journey is to carry out journalistic work or proving that the person is a member of the technical crew accompanying the journalist in a professional capacity;’; |
| --- | --- | --- | --- |

(b)

point (e) shall be replaced by the following:

‘(e)

for journalists and the technical crew accompanying them in a professional capacity:

—

a certificate or other document issued by a professional organisation or the applicant’s employer proving that the person concerned is a qualified journalist and stating that the purpose of the journey is to carry out journalistic work or proving that the person is a member of the technical crew accompanying the journalist in a professional capacity;’;

| (c) | point (i) shall be replaced by the following:






  ‘(i) | for participants in official exchange programmes organised by twin cities and other municipal entities:






  — | a written request of the Head of Administration/Mayor of those cities or other municipal entities;’; |
| --- | --- | --- | --- |

(c)

point (i) shall be replaced by the following:

‘(i)

for participants in official exchange programmes organised by twin cities and other municipal entities:

—

a written request of the Head of Administration/Mayor of those cities or other municipal entities;’;

| (d) | point (j) shall be replaced by the following:






  ‘(j) | for close relatives — spouse, children (including adopted), parents (including custodians), grandparents and grandchildren — visiting citizens of Ukraine legally residing in the territory of the Member States or citizens of the European Union residing in the territory of the Member State of which they are nationals:






  — | a written request from the host person;’; |
| --- | --- | --- | --- |

(d)

point (j) shall be replaced by the following:

‘(j)

for close relatives — spouse, children (including adopted), parents (including custodians), grandparents and grandchildren — visiting citizens of Ukraine legally residing in the territory of the Member States or citizens of the European Union residing in the territory of the Member State of which they are nationals:

—

a written request from the host person;’;

| (e) | point (m) shall be replaced by the following:






  ‘(m) | for visiting for medical reasons and necessary accompanying persons:






  — | an official document of the medical institution confirming the necessity of medical care in that institution, the necessity of being accompanied and proof of sufficient financial means to pay the medical treatment;’; |
| --- | --- | --- | --- |

(e)

point (m) shall be replaced by the following:

‘(m)

for visiting for medical reasons and necessary accompanying persons:

—

an official document of the medical institution confirming the necessity of medical care in that institution, the necessity of being accompanied and proof of sufficient financial means to pay the medical treatment;’;

| (f) | the following points shall be added:






  ‘(n) | for representatives of civil society organisations when undertaking trips for the purposes of educational training, seminars, conferences, including in the framework of exchange programmes:






  — | a written request issued by the host organisation, a confirmation that the person is representing the civil society organisation and the certificate on establishment of such organisation from the relevant Register issued by a state authority in accordance with the national legislation; |
| --- | --- | --- | --- |

(f)

the following points shall be added:

‘(n)

for representatives of civil society organisations when undertaking trips for the purposes of educational training, seminars, conferences, including in the framework of exchange programmes:

—

a written request issued by the host organisation, a confirmation that the person is representing the civil society organisation and the certificate on establishment of such organisation from the relevant Register issued by a state authority in accordance with the national legislation;

| (o) | for members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events held in the territory of the Member States:






  — | a written request from the host organisation confirming that the person concerned is participating in the event; |
| --- | --- | --- |

(o)

for members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events held in the territory of the Member States:

—

a written request from the host organisation confirming that the person concerned is participating in the event;

| (p) | for representatives of religious communities:






  — | a written request from a religious community registered in Ukraine, stating the purpose, duration and frequency of the trips; |
| --- | --- | --- |

(p)

for representatives of religious communities:

—

a written request from a religious community registered in Ukraine, stating the purpose, duration and frequency of the trips;

| (q) | for participants in official Europan Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI):






  — | a written request by the host organisation.’. |
| --- | --- | --- |

(q)

for participants in official Europan Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI):

—

a written request by the host organisation.’.

| (6) | In Article 5, paragraphs 1 to 3, shall be replaced by the following:

  ‘1.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with the term of validity of five years to the following categories of persons:






  (a) | members of national and regional Governments and Parliaments, Constitutional Courts and Supreme Courts, national and regional prosecutors and their deputies, if they are not exempted from the visa requirement by the present Agreement, in the exercise of their duties; |
| --- | --- | --- |

(6)

In Article 5, paragraphs 1 to 3, shall be replaced by the following:

‘1.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with the term of validity of five years to the following categories of persons:

(a)

members of national and regional Governments and Parliaments, Constitutional Courts and Supreme Courts, national and regional prosecutors and their deputies, if they are not exempted from the visa requirement by the present Agreement, in the exercise of their duties;

| (b) | permanent members of official delegations who, following official invitations addressed to Ukraine, shall regularly participate in meetings, consultations, negotiations or exchange programmes, as well as in events held in the territory of the Member States by intergovernmental organisations; |
| --- | --- |

(b)

permanent members of official delegations who, following official invitations addressed to Ukraine, shall regularly participate in meetings, consultations, negotiations or exchange programmes, as well as in events held in the territory of the Member States by intergovernmental organisations;

| (c) | spouses and children (including adopted), who are under the age of 21 or are dependant, and parents (including custodians) visiting citizens of Ukraine legally residing in the territory of the Member States or citizens of the European Union residing in the territory of the Member State of which they are nationals; |
| --- | --- |

(c)

spouses and children (including adopted), who are under the age of 21 or are dependant, and parents (including custodians) visiting citizens of Ukraine legally residing in the territory of the Member States or citizens of the European Union residing in the territory of the Member State of which they are nationals;

| (d) | business people and representatives of business organisations who regularly travel to the Member States; |
| --- | --- |

(d)

business people and representatives of business organisations who regularly travel to the Member States;

| (e) | journalists and the technical crew accompanying them in a professional capacity. |
| --- | --- |

(e)

journalists and the technical crew accompanying them in a professional capacity.

By way of derogation from the first subparagraph, where the need or the intention to travel frequently or regularly is manifestly limited to a shorter period, the term of validity of the multiple-entry visa shall be limited to that period, in particular where

| — | in the case of the persons referred to in point (a), the term of office, |
| --- | --- |

—

in the case of the persons referred to in point (a), the term of office,

| — | in the case of the persons referred to in point (b), the term of the validity of the status as a permanent member of an official delegation, |
| --- | --- |

—

in the case of the persons referred to in point (b), the term of the validity of the status as a permanent member of an official delegation,

| — | in the case of the persons referred to in point (c), the period of validity of the authorisation for legal residence of citizens of Ukraine legally residing in the European Union, |
| --- | --- |

—

in the case of the persons referred to in point (c), the period of validity of the authorisation for legal residence of citizens of Ukraine legally residing in the European Union,

| — | in the case of the persons referred to in point (d), the term of validity of the status as a representative of the business organisation or the work contract, |
| --- | --- |

—

in the case of the persons referred to in point (d), the term of validity of the status as a representative of the business organisation or the work contract,

| — | in the case of the persons referred to in point (e), the work contract |
| --- | --- |

—

in the case of the persons referred to in point (e), the work contract

is less than five years.

2.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with the term of validity of one year to the following categories of persons, provided that during the previous year they have obtained at least one visa, have made use of it in accordance with the laws on entry and stay of the visited State:

| (a) | drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in Ukraine; |
| --- | --- |

(a)

drivers conducting international cargo and passenger transportation services to the territories of the Member States in vehicles registered in Ukraine;

| (b) | members of train, refrigerator and locomotive crews in international trains, travelling to the territories of the Member States; |
| --- | --- |

(b)

members of train, refrigerator and locomotive crews in international trains, travelling to the territories of the Member States;

| (c) | persons participating in scientific, cultural and artistic activities, including university and other exchange programmes, who regularly travel to the Member States; |
| --- | --- |

(c)

persons participating in scientific, cultural and artistic activities, including university and other exchange programmes, who regularly travel to the Member States;

| (d) | participants in international sports events and persons accompanying them in a professional capacity; |
| --- | --- |

(d)

participants in international sports events and persons accompanying them in a professional capacity;

| (e) | participants in official exchange programmes organised by twin cities and other municipal entities; |
| --- | --- |

(e)

participants in official exchange programmes organised by twin cities and other municipal entities;

| (f) | representatives of civil society organisations travelling regularly to Member States for the purposes of educational training, seminars, conferences, including in the framework of exchange programmes; |
| --- | --- |

(f)

representatives of civil society organisations travelling regularly to Member States for the purposes of educational training, seminars, conferences, including in the framework of exchange programmes;

| (g) | for participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI); |
| --- | --- |

(g)

for participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI);

| (h) | students and post-graduate students who regularly travel for the purposes of study or educational training, including in the framework of exchange programmes; |
| --- | --- |

(h)

students and post-graduate students who regularly travel for the purposes of study or educational training, including in the framework of exchange programmes;

| (i) | for representatives of religious communities: |
| --- | --- |

(i)

for representatives of religious communities:

| (j) | for members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events held in the territory of the Member States; |
| --- | --- |

(j)

for members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events held in the territory of the Member States;

| (k) | persons needing to visit regularly for medical reasons and necessary accompanying persons. |
| --- | --- |

(k)

persons needing to visit regularly for medical reasons and necessary accompanying persons.

By way of derogation from the first subparagraph, where the need or the intention to travel frequently or regularly is manifestly limited to a shorter period, the term of validity of the multiple-entry visa shall be limited to that period.

3.   Diplomatic missions and consular posts of the Member States shall issue multiple-entry visas with the term of validity of a minimum of two years and a maximum of five years to the categories of persons referred to in paragraph 2 of this Article, provided that during the previous two years they have made use of the one year multiple-entry visas in accordance with the laws on entry and stay of the visited State unless the need or the intention to travel frequently or regularly is manifestly limited to a shorter period, in which case the term of validity of the multiple-entry visa shall be limited to that period.’.

| (7) | Article 6 shall be amended as follows:






  (a) | paragraph 3 shall be replaced by the following:

  ‘3.   The Member States shall charge a fee of EUR 70 for processing visas in cases where, based on the distance between the applicant’s place of residence and the place where the application has been submitted, the applicant has requested that a decision on the application be taken within three days of its submission, and the consulate has accepted to take a decision within three days.’; |
| --- | --- | --- |

(7)

Article 6 shall be amended as follows:

(a)

paragraph 3 shall be replaced by the following:

‘3.   The Member States shall charge a fee of EUR 70 for processing visas in cases where, based on the distance between the applicant’s place of residence and the place where the application has been submitted, the applicant has requested that a decision on the application be taken within three days of its submission, and the consulate has accepted to take a decision within three days.’;

| (b) | in paragraph 4,






  (i) | the introductory words shall be replaced by the following:

  ‘4.   Without prejudice to paragraph 5 fees for processing the visa application are waived for the following categories of persons:’; |
| --- | --- | --- |

(b)

in paragraph 4,

(i)

the introductory words shall be replaced by the following:

‘4.   Without prejudice to paragraph 5 fees for processing the visa application are waived for the following categories of persons:’;

| (ii) | in point (a) the following words shall be added:

  ‘or citizens of the European Union residing in the territory of the Member State of which they are nationals’; |
| --- | --- |

(ii)

in point (a) the following words shall be added:

‘or citizens of the European Union residing in the territory of the Member State of which they are nationals’;

| (iii) | in point (i) the following words shall be added:

  ‘and other municipal entities’; |
| --- | --- |

(iii)

in point (i) the following words shall be added:

‘and other municipal entities’;

| (iv) | in point (j) the following words shall be added:

  ‘and the technical crew accompanying them in a professional capacity’; |
| --- | --- |

(iv)

in point (j) the following words shall be added:

‘and the technical crew accompanying them in a professional capacity’;

| (v) | the following points shall be added:






  ‘(o) | representatives of the religious communities; |
| --- | --- | --- |

(v)

the following points shall be added:

‘(o)

representatives of the religious communities;

| (p) | for members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events held in the territory of the Member States; |
| --- | --- |

(p)

for members of the professions participating in international exhibitions, conferences, symposia, seminars or other similar events held in the territory of the Member States;

| (q) | participants aged 25 years or less in seminars, conferences, sports, cultural or educational events, organised by non-profit organisations; |
| --- | --- |

(q)

participants aged 25 years or less in seminars, conferences, sports, cultural or educational events, organised by non-profit organisations;

| (r) | representatives of civil society organisations undertaking trips for the purposes of educational training, seminars, conferences, including in the framework of exchange programmes; |
| --- | --- |

(r)

representatives of civil society organisations undertaking trips for the purposes of educational training, seminars, conferences, including in the framework of exchange programmes;

| (s) | for participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI).’; |
| --- | --- |

(s)

for participants in official European Union cross-border cooperation programmes, such as under the European Neighbourhood and Partnership Instrument (ENPI).’;

| (vi) | the following subparagraph shall be added:
  ‘The first subparagraph shall apply also where the purpose of the journey is transit.’; |
| --- | --- |

(vi)

the following subparagraph shall be added:

‘The first subparagraph shall apply also where the purpose of the journey is transit.’;

| (c) | the following paragraph shall be added:

  ‘5.   If a Member State cooperates with an external service provider in view of issuing a visa the external service provider may charge a service fee. This fee shall be proportionate to the costs incurred by the external service provider while performing its tasks and shall not exceed EUR 30. The Member States shall maintain the possibility for all applicants to lodge their applications directly at their consulates If applicants are required to obtain an appointment for the lodging of an application the appointment shall, as a rule, take place within a period of two weeks from the date when the appointment was requested.’. |
| --- | --- |

(c)

the following paragraph shall be added:

‘5.   If a Member State cooperates with an external service provider in view of issuing a visa the external service provider may charge a service fee. This fee shall be proportionate to the costs incurred by the external service provider while performing its tasks and shall not exceed EUR 30. The Member States shall maintain the possibility for all applicants to lodge their applications directly at their consulates If applicants are required to obtain an appointment for the lodging of an application the appointment shall, as a rule, take place within a period of two weeks from the date when the appointment was requested.’.

| (8) | Article 10 shall be amended as follows:






  (a) | the title shall be replaced by the following:


  ‘Diplomatic and service passports’; |
| --- | --- | --- |

(8)

Article 10 shall be amended as follows:

(a)

the title shall be replaced by the following:

‘Diplomatic and service passports’;

‘Diplomatic and service passports’;

| (b) | in paragraph 2, which shall be renumbered 3, the words ‘in paragraph 1’ shall be replaced by the words ‘in paragraphs 1 and 2’; |
| --- | --- |

(b)

in paragraph 2, which shall be renumbered 3, the words ‘in paragraph 1’ shall be replaced by the words ‘in paragraphs 1 and 2’;

| (c) | a new paragraph 2 shall be inserted as follows:

  ‘2.   Citizens of Ukraine who are holders of valid biometric service passports can enter, leave and transit through the territories of the Member States without visas.’. |
| --- | --- |

(c)

a new paragraph 2 shall be inserted as follows:

‘2.   Citizens of Ukraine who are holders of valid biometric service passports can enter, leave and transit through the territories of the Member States without visas.’.

| (9) | Article 12(1) shall be amended as follows:






  (a) | in the first sentence the word ‘Community’ shall be replaced by the word ‘Union’; |
| --- | --- | --- |

(9)

Article 12(1) shall be amended as follows:

(a)

in the first sentence the word ‘Community’ shall be replaced by the word ‘Union’;

| (b) | in the second sentence, the word ‘Community’ shall be replaced by the words ‘European Union’ and the words ‘Commission of the European Communities’ by the words ‘European Commission.’. |
| --- | --- |

(b)

in the second sentence, the word ‘Community’ shall be replaced by the words ‘European Union’ and the words ‘Commission of the European Communities’ by the words ‘European Commission.’.

| (10) | Article 13 shall be amended as follows:






  (a) | the existing paragraph shall be numbered as paragraph 1; |
| --- | --- | --- |

(10)

Article 13 shall be amended as follows:

(a)

the existing paragraph shall be numbered as paragraph 1;

| (b) | the following paragraph shall be added:

  ‘2.   The provisions of bilateral Agreements or arrangements between individual Member States and Ukraine concluded before the entry into force of this Agreement providing for the exemption of the holders of non-biometric service passports from the visa requirement shall continue to apply without prejudice to the right of the Member States concerned or Ukraine to denounce or suspend these bilateral agreements or arrangements.’. |
| --- | --- |

(b)

the following paragraph shall be added:

‘2.   The provisions of bilateral Agreements or arrangements between individual Member States and Ukraine concluded before the entry into force of this Agreement providing for the exemption of the holders of non-biometric service passports from the visa requirement shall continue to apply without prejudice to the right of the Member States concerned or Ukraine to denounce or suspend these bilateral agreements or arrangements.’.

Article 2

This Agreement shall be ratified or approved by the Parties in accordance with their respective procedures and shall enter into force on the first day of the second month following the date on which the last Party notifies the other that the procedures referred to above have been completed.

Done at Brussels, on the 23rd day of July in the year two thousand and twelve, in duplicate in the Bulgarian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish, Swedish and Ukrainian languages, each of those texts being equally authentic.

За Европейския съюз

Por la Unión Europea

Za Evropskou unii

For Den Europæiske Union

Für die Europäische Union

Euroopa Liidu nimel

Για την Ευρωπαϊκή Ένωση

For the European Union

Pour l'Union européenne

Per l'Unione europea

Eiropas Savienības vārdā –

Europos Sąjungos vardu

Az Európai Unió részéről

Għall-Unjoni Ewropea

Voor de Europese Unie

W imieniu Unii Europejskiej

Pela União Europeia

Pentru Uniunea Europeană

Za Európsku úniu

Za Evropsko unijo

Euroopan unionin puolesta

För Europeiska unionen

За Європейське Спiвтовариство

Image 4

Image 5

За Украйна

Por Ucrania

Za Ukrajinu

For Ukraine

Für die Ukraine

Ukraina nimel

Για την Ουκρανία

For Ukraine

Pour l'Ukraine

Per l'Ucraina

Ukrainas vārdā

Ukrainos vardu

Ukrajna részéről

Għall-Ukrajna

Voor Oekraïne

W imieniu Ukrainy

Pela Ucrânia

Pentru Ucraina

Za Ukrajinu

Za Ukrajino

Ukrainan puolesta

På Ukrainas vägnar

За Украïнy

Image 6

---

(1)  
  OJ L 243, 15.9.2009, p. 1.

1

EUROPEAN UNION DECLARATION ON DOCUMENTS TO BE SUBMITTED WHEN APPLYING FOR SHORT-STAY VISAS

The European Union will establish a harmonised list of supporting documents, in accordance with Article 48(1)(a) of the Visa Code, in order to ensure that applicants from Ukraine are required to submit, in principle, the same supporting documents.

EUROPEAN UNION DECLARATION ON FACILITATIONS FOR FAMILY MEMBERS

The European Union takes note of the suggestion of Ukraine to give a wider definition to the notion of family members that should benefit from visa facilitation as well as of the importance that Ukraine attaches to the simplification of movement of this category of persons.

In order to ease the mobility of an extended number of persons which have family links (in particular sisters and brothers and their children) with citizens of Ukraine legally residing in the territories of Member States or with citizens of the European Union residing in the territory of the Member State of which they are nationals, the European Union invites the Member States’ consular offices to make full use of the existing possibilities in the Visa Code for facilitating the issuance of visas to this category of persons, including in particular, the simplification of documentary evidence requested for the applicants, exemptions from handling fees and, where appropriate, the issuing of multiple-entry visas.

EUROPEAN UNION DECLARATION ON ARTICLE 10 (2) OF THE AGREEMENT

The European Union may invoke a partial suspension of the Agreement and in particular of Article 10(2), in accordance with the procedure set up by Article 14(5) of the Agreement, if the implementation of Article 10(2) is abused by Ukraine or leads to a threat to public security. If the implementation of Article 10(2) is suspended, the European Union shall initiate consultations in the framework of the Committee set up by the Agreement with a view to solving the problems that led to the suspension.

JOINT DECLARATION CONCERNING SWITZERLAND AND LIECHTENSTEIN

The Parties take note of the close relationship between the Union and Switzerland and Liechtenstein, particularly by virtue of the Agreement of 26 October 2004 concerning the association of these countries with the implementation, application and development of the Schengen acquis.

acquis

In such circumstances, it is desirable that the authorities of Switzerland and Liechtenstein and Ukraine conclude, without delay, bilateral agreements on the facilitation of the issuance of short-stay visas in similar terms as the amended Agreement.

---

REGULATIONS

| 20.6.2013 | EN | Official Journal of the European Union | L 168/18 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/18

---

COMMISSION IMPLEMENTING REGULATION (EU) No 570/2013

of 17 June 2013

approving the active substance geraniol, in accordance with Regulation (EC) No 1107/2009 of the European Parliament and of the Council concerning the placing of plant protection products on the market, and amending the Annex to Implementing Regulation (EU) No 540/2011

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EC) No 1107/2009 of the European Parliament and of the Council of 21 October 2009 concerning the placing of plant protection products on the market and repealing Council Directives 79/117/EEC and 91/414/EEC (1), and in particular Article 13(2) and Article 78(2) thereof,

Whereas:

| (1) | In accordance with Article 80(1)(a) of Regulation (EC) No 1107/2009, Directive 91/414/EEC (2) is to apply, with respect to the procedure and the conditions for approval, to active substances for which a decision has been adopted in accordance with Article 6(3) of that Directive before 14 June 2011. For geraniol the conditions of Article 80(1)(a) of Regulation (EC) No 1107/2009 are fulfilled by Commission Decision 2011/266/EU (3). |
| --- | --- |

(1)

In accordance with Article 80(1)(a) of Regulation (EC) No 1107/2009, Directive 91/414/EEC (2) is to apply, with respect to the procedure and the conditions for approval, to active substances for which a decision has been adopted in accordance with Article 6(3) of that Directive before 14 June 2011. For geraniol the conditions of Article 80(1)(a) of Regulation (EC) No 1107/2009 are fulfilled by Commission Decision 2011/266/EU (3).

| (2) | In accordance with Article 6(2) of Directive 91/414/EEC the United Kingdom received on 7 March 2008 an application from Eden Research PLC for the inclusion of the active substance geraniol in Annex I to Directive 91/414/EEC. Decision 2011/266/EU confirmed that the dossier was ‘complete’ in the sense that it could be considered as satisfying, in principle, the data and information requirements of Annexes II and III to Directive 91/414/EEC. |
| --- | --- |

(2)

In accordance with Article 6(2) of Directive 91/414/EEC the United Kingdom received on 7 March 2008 an application from Eden Research PLC for the inclusion of the active substance geraniol in Annex I to Directive 91/414/EEC. Decision 2011/266/EU confirmed that the dossier was ‘complete’ in the sense that it could be considered as satisfying, in principle, the data and information requirements of Annexes II and III to Directive 91/414/EEC.

| (3) | For that active substance, the effects on human and animal health and the environment have been assessed, in accordance with the provisions of Article 6(2) and (4) of Directive 91/414/EEC, for the uses proposed by the applicant. The designated rapporteur Member State submitted a draft assessment report on 30 June 2011. |
| --- | --- |

(3)

For that active substance, the effects on human and animal health and the environment have been assessed, in accordance with the provisions of Article 6(2) and (4) of Directive 91/414/EEC, for the uses proposed by the applicant. The designated rapporteur Member State submitted a draft assessment report on 30 June 2011.

| (4) | The draft assessment report was reviewed by the Member States and the European Food Safety Authority (hereinafter ‘the Authority’). The Authority presented to the Commission its conclusion on the review of the pesticide risk assessment of the active substance geraniol (4) on 15 October 2012. The draft assessment report and the conclusion of the Authority were reviewed by the Member States and the Commission within the Standing Committee on the Food Chain and Animal Health and the draft assessment report was finalised on 17 May 2013 in the format of the Commission review report for geraniol. |
| --- | --- |

(4)

The draft assessment report was reviewed by the Member States and the European Food Safety Authority (hereinafter ‘the Authority’). The Authority presented to the Commission its conclusion on the review of the pesticide risk assessment of the active substance geraniol (4) on 15 October 2012. The draft assessment report and the conclusion of the Authority were reviewed by the Member States and the Commission within the Standing Committee on the Food Chain and Animal Health and the draft assessment report was finalised on 17 May 2013 in the format of the Commission review report for geraniol.

| (5) | It has appeared from the various examinations made that plant protection products containing geraniol may be expected to satisfy, in general, the requirements laid down in Article 5(1)(a) and (b) and Article 5(3) of Directive 91/414/EEC, in particular with regard to the use which was examined and detailed in the Commission review report. It is therefore appropriate to approve geraniol. |
| --- | --- |

(5)

It has appeared from the various examinations made that plant protection products containing geraniol may be expected to satisfy, in general, the requirements laid down in Article 5(1)(a) and (b) and Article 5(3) of Directive 91/414/EEC, in particular with regard to the use which was examined and detailed in the Commission review report. It is therefore appropriate to approve geraniol.

| (6) | In accordance with Article 13(2) of Regulation (EC) No 1107/2009 in conjunction with Article 6 thereof and in the light of current scientific and technical knowledge, it is, however, necessary to include certain conditions and restrictions. It is, in particular, appropriate to require further confirmatory information. |
| --- | --- |

(6)

In accordance with Article 13(2) of Regulation (EC) No 1107/2009 in conjunction with Article 6 thereof and in the light of current scientific and technical knowledge, it is, however, necessary to include certain conditions and restrictions. It is, in particular, appropriate to require further confirmatory information.

| (7) | A reasonable period should be allowed to elapse before approval in order to permit Member States and the interested parties to prepare themselves to meet the new requirements resulting from the approval. |
| --- | --- |

(7)

A reasonable period should be allowed to elapse before approval in order to permit Member States and the interested parties to prepare themselves to meet the new requirements resulting from the approval.

| (8) | Without prejudice to the obligations provided for in Regulation (EC) No 1107/2009 as a consequence of approval, taking into account the specific situation created by the transition from Directive 91/414/EEC to Regulation (EC) No 1107/2009, the following should, however, apply. Member States should be allowed a period of six months after approval to review authorisations of plant protection products containing geraniol. Member States should, as appropriate, vary, replace or withdraw authorisations. By way of derogation from that deadline, a longer period should be provided for the submission and assessment of the update of the complete Annex III dossier, as set out in Directive 91/414/EEC, of each plant protection product for each intended use in accordance with the uniform principles. |
| --- | --- |

(8)

Without prejudice to the obligations provided for in Regulation (EC) No 1107/2009 as a consequence of approval, taking into account the specific situation created by the transition from Directive 91/414/EEC to Regulation (EC) No 1107/2009, the following should, however, apply. Member States should be allowed a period of six months after approval to review authorisations of plant protection products containing geraniol. Member States should, as appropriate, vary, replace or withdraw authorisations. By way of derogation from that deadline, a longer period should be provided for the submission and assessment of the update of the complete Annex III dossier, as set out in Directive 91/414/EEC, of each plant protection product for each intended use in accordance with the uniform principles.

| (9) | The experience gained from inclusions in Annex I to Directive 91/414/EEC of active substances assessed in the framework of Commission Regulation (EEC) No 3600/92 of 11 December 1992 laying down the detailed rules for the implementation of the first stage of the programme of work referred to in Article 8(2) of Council Directive 91/414/EEC concerning the placing of plant protection products on the market (5) has shown that difficulties can arise in interpreting the duties of holders of existing authorisations in relation to access to data. In order to avoid further difficulties it therefore appears necessary to clarify the duties of the Member States, especially the duty to verify that the holder of an authorisation demonstrates access to a dossier satisfying the requirements of Annex II to that Directive. However, this clarification does not impose any new obligations on Member States or holders of authorisations compared to the Directives which have been adopted until now amending Annex I to that Directive or the Regulations approving active substances. |
| --- | --- |

(9)

The experience gained from inclusions in Annex I to Directive 91/414/EEC of active substances assessed in the framework of Commission Regulation (EEC) No 3600/92 of 11 December 1992 laying down the detailed rules for the implementation of the first stage of the programme of work referred to in Article 8(2) of Council Directive 91/414/EEC concerning the placing of plant protection products on the market (5) has shown that difficulties can arise in interpreting the duties of holders of existing authorisations in relation to access to data. In order to avoid further difficulties it therefore appears necessary to clarify the duties of the Member States, especially the duty to verify that the holder of an authorisation demonstrates access to a dossier satisfying the requirements of Annex II to that Directive. However, this clarification does not impose any new obligations on Member States or holders of authorisations compared to the Directives which have been adopted until now amending Annex I to that Directive or the Regulations approving active substances.

| (10) | In accordance with Article 13(4) of Regulation (EC) No 1107/2009, the Annex to Commission Implementing Regulation (EU) No 540/2011 of 25 May 2011 implementing Regulation (EC) No 1107/2009 of the European Parliament and of the Council as regards the list of approved active substances (6) should be amended accordingly. |
| --- | --- |

(10)

In accordance with Article 13(4) of Regulation (EC) No 1107/2009, the Annex to Commission Implementing Regulation (EU) No 540/2011 of 25 May 2011 implementing Regulation (EC) No 1107/2009 of the European Parliament and of the Council as regards the list of approved active substances (6) should be amended accordingly.

| (11) | The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on the Food Chain and Animal Health, |
| --- | --- |

(11)

The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on the Food Chain and Animal Health,

HAS ADOPTED THIS REGULATION:

Article 1

Approval of active substance

The active substance geraniol, as specified in Annex I, is approved subject to the conditions laid down in that Annex.

Article 2

Re-evaluation of plant protection products

1.   Member States shall in accordance with Regulation (EC) No 1107/2009, where necessary, amend or withdraw existing authorisations for plant protection products containing geraniol as an active substance by 31 May 2014.

By that date they shall in particular verify that the conditions in Annex I to this Regulation are met, with the exception of those identified in the column on specific provisions of that Annex, and that the holder of the authorisation has, or has access to, a dossier satisfying the requirements of Annex II to Directive 91/414/EEC in accordance with the conditions of Article 13(1) to (4) of that Directive and Article 62 of Regulation (EC) No 1107/2009.

2.   By way of derogation from paragraph 1, for each authorised plant protection product containing geraniol as either the only active substance or as one of several active substances, all of which were listed in the Annex to Implementing Regulation (EU) No 540/2011 by 30 November 2013 at the latest, Member States shall re-evaluate the product in accordance with the uniform principles, as referred to in Article 29(6) of Regulation (EC) No 1107/2009, on the basis of a dossier satisfying the requirements of Annex III to Directive 91/414/EEC and taking into account the column on specific provisions of Annex I to this Regulation. On the basis of that evaluation, they shall determine whether the product satisfies the conditions set out in Article 29(1) of Regulation (EC) No 1107/2009.

Following that determination Member States shall:

| (a) | in the case of a product containing geraniol as the only active substance, where necessary, amend or withdraw the authorisation by 31 May 2015 at the latest; or |
| --- | --- |

(a)

in the case of a product containing geraniol as the only active substance, where necessary, amend or withdraw the authorisation by 31 May 2015 at the latest; or

| (b) | in the case of a product containing geraniol as one of several active substances, where necessary, amend or withdraw the authorisation by 31 May 2015 or by the date fixed for such an amendment or withdrawal in the respective act or acts which added the relevant substance or substances to Annex I to Directive 91/414/EEC or approved that substance or those substances, whichever is the latest. |
| --- | --- |

(b)

in the case of a product containing geraniol as one of several active substances, where necessary, amend or withdraw the authorisation by 31 May 2015 or by the date fixed for such an amendment or withdrawal in the respective act or acts which added the relevant substance or substances to Annex I to Directive 91/414/EEC or approved that substance or those substances, whichever is the latest.

Article 3

Amendments to Implementing Regulation (EU) No 540/2011

The Annex to Implementing Regulation (EU) No 540/2011 is amended in accordance with Annex II to this Regulation.

Article 4

Entry into force and date of application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Official Journal of the European Union

It shall apply from 1 December 2013.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 17 June 2013.

For the Commission

The President

José Manuel BARROSO

---

(1)  
  OJ L 309, 24.11.2009, p. 1.

1

(2)  
  OJ L 230, 19.8.1991, p. 1.

2

(3)  
  OJ L 114, 4.5.2011, p. 3.

3

(4)  EFSA Journal (2012) 10(11):2915. Available online: www.efsa.europa.eu

4

(5)  
  OJ L 366, 15.12.1992, p. 10.

5

(6)  
  OJ L 153, 11.6.2011, p. 1.

6

---

ANNEX I

| Common Name, Identification Numbers | IUPAC Name | Purity (1) | Date of approval | Expiration of approval | Specific provisions |
| --- | --- | --- | --- | --- | --- |
| Geraniol CAS No 106-24-1
  CIPAC No 968 | (E) 3,7-dimethyl-2,6-octadien-1-ol | ≥ 980 g/kg | 1 December 2013 | 30 November 2023 | For the implementation of the uniform principles as referred to in Article 29(6) of Regulation (EC) No 1107/2009, the conclusions of the review report on geraniol, and in particular Appendices I and II thereof, as finalised in the Standing Committee on the Food Chain and Animal Health on 17 May 2013 shall be taken into account.
  In this overall assessment Member States shall pay particular attention to






  — | the protection of operators, workers, bystanders and residents, ensuring that conditions of use include the application of adequate personal protective equipment, where appropriate; |

Common Name, Identification Numbers

IUPAC Name

Purity (1)

Date of approval

Expiration of approval

Specific provisions

Geraniol CAS No 106-24-1

CIPAC No 968

(E) 3,7-dimethyl-2,6-octadien-1-ol

≥ 980 g/kg

1 December 2013

30 November 2023

For the implementation of the uniform principles as referred to in Article 29(6) of Regulation (EC) No 1107/2009, the conclusions of the review report on geraniol, and in particular Appendices I and II thereof, as finalised in the Standing Committee on the Food Chain and Animal Health on 17 May 2013 shall be taken into account.

In this overall assessment Member States shall pay particular attention to

—

the protection of operators, workers, bystanders and residents, ensuring that conditions of use include the application of adequate personal protective equipment, where appropriate;

| — | the protection of groundwater, when the substance is applied in regions with vulnerable soil and/or climatic conditions; |
| --- | --- |

—

the protection of groundwater, when the substance is applied in regions with vulnerable soil and/or climatic conditions;

| — | the risk to aquatic organisms; |
| --- | --- |

—

the risk to aquatic organisms;

| — | the risk to birds and mammals. |
| --- | --- |

—

the risk to birds and mammals.

Conditions of use shall include risk mitigation measures, where appropriate.

The applicant shall submit confirmatory information as regards

| (a) | data comparing natural background exposure situations of geraniol in relation to exposure from the use of geraniol as a plant protection product. This data shall cover human exposure as well as exposure of birds, mammals and aquatic organisms; |
| --- | --- |

(a)

data comparing natural background exposure situations of geraniol in relation to exposure from the use of geraniol as a plant protection product. This data shall cover human exposure as well as exposure of birds, mammals and aquatic organisms;

| (b) | the groundwater exposure. |
| --- | --- |

(b)

the groundwater exposure.

The applicant shall submit to the Commission, the Member States and the Authority that information by 30 November 2015.

---

(1)  Further details on identity and specification of active substance are provided in the review report.

---

ANNEX II

In Part B of the Annex to Implementing Regulation (EU) No 540/2011, the following entry is added:

| Number | Common Name, Identification Numbers | IUPAC Name | Purity (*1) | Date of approval | Expiration of approval | Specific provisions |
| --- | --- | --- | --- | --- | --- | --- |
| ‘46 | Geraniol CAS No 106-24-1
  CIPAC No 968 | (E) 3,7-dimethyl-2,6-octadien-1-ol | ≥ 980 g/kg | 1 December 2013 | 30 November 2023 | For the implementation of the uniform principles as referred to in Article 29(6) of Regulation (EC) No 1107/2009, the conclusions of the review report on geraniol, and in particular Appendices I and II thereof, as finalised in the Standing Committee on the Food Chain and Animal Health on 17 May 2013 shall be taken into account.
  In this overall assessment Member States shall pay particular attention to






  — | the protection of operators, workers, bystanders and residents, ensuring that conditions of use include the application of adequate personal protective equipment, where appropriate; |

Number

Common Name, Identification Numbers

IUPAC Name

Purity (*1)

Date of approval

Expiration of approval

Specific provisions

‘46

Geraniol CAS No 106-24-1

CIPAC No 968

(E) 3,7-dimethyl-2,6-octadien-1-ol

≥ 980 g/kg

1 December 2013

30 November 2023

For the implementation of the uniform principles as referred to in Article 29(6) of Regulation (EC) No 1107/2009, the conclusions of the review report on geraniol, and in particular Appendices I and II thereof, as finalised in the Standing Committee on the Food Chain and Animal Health on 17 May 2013 shall be taken into account.

In this overall assessment Member States shall pay particular attention to

—

the protection of operators, workers, bystanders and residents, ensuring that conditions of use include the application of adequate personal protective equipment, where appropriate;

| — | the protection of groundwater, when the substance is applied in regions with vulnerable soil and/or climatic conditions; |
| --- | --- |

—

the protection of groundwater, when the substance is applied in regions with vulnerable soil and/or climatic conditions;

| — | the risk to aquatic organisms; |
| --- | --- |

—

the risk to aquatic organisms;

| — | the risk to birds and mammals. |
| --- | --- |

—

the risk to birds and mammals.

Conditions of use shall include risk mitigation measures, where appropriate.

The applicant shall submit confirmatory information as regards

| (a) | data comparing natural background exposure situations of geraniol in relation to exposure from the use of geraniol as a plant protection product. This data shall cover human exposure as well as exposure of birds, mammals and aquatic organisms; |
| --- | --- |

(a)

data comparing natural background exposure situations of geraniol in relation to exposure from the use of geraniol as a plant protection product. This data shall cover human exposure as well as exposure of birds, mammals and aquatic organisms;

| (b) | the groundwater exposure. |
| --- | --- |

(b)

the groundwater exposure.

The applicant shall submit to the Commission, the Member States and the Authority that information by 30 November 2015.

---

(*1)  Further details on identity and specification of active substance are provided in the review report.’

*1

---

| 20.6.2013 | EN | Official Journal of the European Union | L 168/23 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/23

---

COMMISSION IMPLEMENTING REGULATION (EU) No 571/2013

of 19 June 2013

establishing the standard import values for determining the entry price of certain fruit and vegetables

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (1),

Having regard to Commission Implementing Regulation (EU) No 543/2011 of 7 June 2011 laying down detailed rules for the application of Council Regulation (EC) No 1234/2007 in respect of the fruit and vegetables and processed fruit and vegetables sectors (2), and in particular Article 136(1) thereof,

Whereas:

| (1) | Implementing Regulation (EU) No 543/2011 lays down, pursuant to the outcome of the Uruguay Round multilateral trade negotiations, the criteria whereby the Commission fixes the standard values for imports from third countries, in respect of the products and periods stipulated in Annex XVI, Part A thereto. |
| --- | --- |

(1)

Implementing Regulation (EU) No 543/2011 lays down, pursuant to the outcome of the Uruguay Round multilateral trade negotiations, the criteria whereby the Commission fixes the standard values for imports from third countries, in respect of the products and periods stipulated in Annex XVI, Part A thereto.

| (2) | The standard import value is calculated each working day, in accordance with Article 136(1) of Implementing Regulation (EU) No 543/2011, taking into account variable daily data. Therefore this Regulation should enter into force on the day of its publication in the Official Journal of the European Union, |
| --- | --- |

(2)

The standard import value is calculated each working day, in accordance with Article 136(1) of Implementing Regulation (EU) No 543/2011, taking into account variable daily data. Therefore this Regulation should enter into force on the day of its publication in the Official Journal of the European Union,

HAS ADOPTED THIS REGULATION:

Article 1

The standard import values referred to in Article 136 of Implementing Regulation (EU) No 543/2011 are fixed in the Annex to this Regulation.

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 19 June 2013.

For the Commission, On behalf of the President,

Jerzy PLEWA

Director-General for Agriculture and Rural Development

---

(1)  
  OJ L 299, 16.11.2007, p. 1.

1

(2)  
  OJ L 157, 15.6.2011, p. 1.

2

---

ANNEX

Standard import values for determining the entry price of certain fruit and vegetables

| (EUR/100 kg) |
| --- |
| CN code | Third country code (1) | Standard import value |
| 0702 00 00 | MK | 43,1 |
| TR | 61,2 |
| ZZ | 52,2 |
| 0707 00 05 | MK | 32,3 |
| TR | 121,6 |
| ZZ | 77,0 |
| 0709 93 10 | MA | 106,4 |
| TR | 148,0 |
| ZZ | 127,2 |
| 0805 50 10 | AR | 92,3 |
| TR | 102,5 |
| ZA | 101,6 |
| ZZ | 98,8 |
| 0808 10 80 | AR | 179,4 |
| BR | 111,5 |
| CL | 136,7 |
| CN | 96,0 |
| NZ | 133,3 |
| US | 145,5 |
| UY | 165,4 |
| ZA | 118,6 |
| ZZ | 135,8 |
| 0809 10 00 | IL | 342,4 |
| TR | 236,9 |
| ZZ | 289,7 |
| 0809 29 00 | TR | 376,9 |
| US | 660,1 |
| ZZ | 518,5 |
| 0809 30 | IL | 214,0 |
| MA | 207,9 |
| TR | 179,1 |
| ZZ | 200,3 |
| 0809 40 05 | CL | 149,9 |
| IL | 308,9 |
| ZA | 118,0 |
| ZZ | 192,3 |

(EUR/100 kg)

CN code

Third country code (1)

Standard import value

0702 00 00

MK

43,1

TR

61,2

ZZ

52,2

0707 00 05

MK

32,3

TR

121,6

ZZ

77,0

0709 93 10

MA

106,4

TR

148,0

ZZ

127,2

0805 50 10

AR

92,3

TR

102,5

ZA

101,6

ZZ

98,8

0808 10 80

AR

179,4

BR

111,5

CL

136,7

CN

96,0

NZ

133,3

US

145,5

UY

165,4

ZA

118,6

ZZ

135,8

0809 10 00

IL

342,4

TR

236,9

ZZ

289,7

0809 29 00

TR

376,9

US

660,1

ZZ

518,5

0809 30

IL

214,0

MA

207,9

TR

179,1

ZZ

200,3

0809 40 05

CL

149,9

IL

308,9

ZA

118,0

ZZ

192,3

---

(1)  Nomenclature of countries laid down by Commission Regulation (EC) No 1833/2006 (OJ L 354, 14.12.2006, p. 19). Code ‘
  ZZ
  ’ stands for ‘of other origin’.

---

| 20.6.2013 | EN | Official Journal of the European Union | L 168/25 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/25

---

COMMISSION IMPLEMENTING REGULATION (EU) No 572/2013

of 19 June 2013

on the issue of import licences for applications lodged during the first seven days of June 2013 under the tariff quotas opened by Regulation (EC) No 533/2007 for poultrymeat

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (1),

Having regard to Commission Regulation (EC) No 1301/2006 of 31 August 2006 laying down common rules for the administration of import tariff quotas for agricultural products managed by a system of import licences (2), and in particular Article 7(2) thereof,

Having regard to Commission Regulation (EC) No 533/2007 of 14 May 2007 opening and providing for the administration of tariff quotas in the poultrymeat sector (3), and in particular Article 5(6) thereof,

Whereas:

| (1) | Regulation (EC) No 533/2007 opened tariff quotas for imports of poultrymeat products. |
| --- | --- |

(1)

Regulation (EC) No 533/2007 opened tariff quotas for imports of poultrymeat products.

| (2) | The applications for import licences lodged during the first seven days of June 2013 for the subperiod from 1 July to 30 September 2013 relate, for some quotas, to quantities exceeding those available. The extent to which import licences may be issued should therefore be determined by establishing the allocation coefficient to be applied to the quantities requested, |
| --- | --- |

(2)

The applications for import licences lodged during the first seven days of June 2013 for the subperiod from 1 July to 30 September 2013 relate, for some quotas, to quantities exceeding those available. The extent to which import licences may be issued should therefore be determined by establishing the allocation coefficient to be applied to the quantities requested,

HAS ADOPTED THIS REGULATION:

Article 1

The quantities for which import licence applications have been lodged under Regulation (EC) No 533/2007 for the subperiod from 1 July to 30 September 2013 shall be multiplied by the allocation coefficients set out in the Annex to this Regulation.

Article 2

This Regulation shall enter into force on 20 June 2013.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 19 June 2013.

For the Commission, On behalf of the President,

Jerzy PLEWA

Director-General for Agriculture and Rural Development

---

(1)  
  OJ L 299, 16.11.2007, p. 1.

1

(2)  
  OJ L 238, 1.9.2006, p. 13.

2

(3)  
  OJ L 125, 15.5.2007, p. 9.

3

---

ANNEX

| Group No | Order No | Allocation coefficient for import licence applications lodged for the subperiod from 1.7.2013-30.9.2013
  (%) |
| --- | --- | --- |
| P1 | 09.4067 | 2,031859 |
| P3 | 09.4069 | 0,379603 |

Group No

Order No

Allocation coefficient for import licence applications lodged for the subperiod from 1.7.2013-30.9.2013

(%)

P1

09.4067

2,031859

P3

09.4069

0,379603

---

| 20.6.2013 | EN | Official Journal of the European Union | L 168/27 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/27

---

COMMISSION IMPLEMENTING REGULATION (EU) No 573/2013

of 19 June 2013

on the issue of import licences for applications lodged during the first seven days of June 2013 under the tariff quota opened by Regulation (EC) No 1385/2007 for poultrymeat

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (1),

Having regard to Commission Regulation (EC) No 1301/2006 of 31 August 2006 laying down common rules for the administration of import tariff quotas for agricultural products managed by a system of import licences (2), and in particular Article 7(2) thereof,

Having regard to Commission Regulation (EC) No 1385/2007 of 26 November 2007 laying down detailed rules for the application of Council Regulation (EC) No 774/94 as regards opening and providing for the administration of certain Community tariff quotas for poultrymeat (3), and in particular Article 5(6) thereof,

Whereas:

The applications for import licences lodged during the first seven days of June 2013 for the subperiod from 1 July to 30 September 2013 relate, for some quotas, to quantities exceeding those available. The extent to which import licences may be issued should therefore be determined by establishing the allocation coefficient to be applied to the quantities requested,

HAS ADOPTED THIS REGULATION:

Article 1

The quantities for which import licence applications have been lodged for the subperiod from 1 July to 30 September 2013 under Regulation (EC) No 1385/2007 shall be multiplied by the allocation coefficients set out in the Annex hereto.

Article 2

This Regulation shall enter into force on 20 June 2013.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 19 June 2013.

For the Commission, On behalf of the President,

Jerzy PLEWA

Director-General for Agriculture and Rural Development

---

(1)  
  OJ L 299, 16.11.2007, p. 1.

1

(2)  
  OJ L 238, 1.9.2006, p. 13.

2

(3)  
  OJ L 309, 27.11.2007, p. 47.

3

---

ANNEX

| Group No | Order No | Allocation coefficient for import licence applications lodged for the subperiod from 1.7.2013-30.9.2013
  (%) |
| --- | --- | --- |
| 1 | 09.4410 | 0,271371 |
| 2 | 09.4411 | 0,276168 |
| 3 | 09.4412 | 0,333671 |
| 4 | 09.4420 | 0,373693 |
| 6 | 09.4422 | 0,375379 |

Group No

Order No

Allocation coefficient for import licence applications lodged for the subperiod from 1.7.2013-30.9.2013

(%)

1

09.4410

0,271371

2

09.4411

0,276168

3

09.4412

0,333671

4

09.4420

0,373693

6

09.4422

0,375379

---

| 20.6.2013 | EN | Official Journal of the European Union | L 168/29 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/29

---

COMMISSION IMPLEMENTING REGULATION (EU) No 574/2013

of 19 June 2013

fixing an allocation coefficient for available quantities of out-of-quota sugar to be sold on the Union market at reduced surplus levy during the 2012/2013 marketing year

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (1),

Having regard to Commission Implementing Regulation (EU) No 505/2013 of 31 May 2013 laying down exceptional measures as regards the release of out-of-quota sugar and isoglucose on the Union market at reduced surplus levy during the 2012/2013 marketing year (2), and in particular Article 5 thereof,

Whereas:

| (1) | The quantities covered by certificate applications for out-of-quota sugar submitted from 4 June 2013 to 11 June 2013 and notified to the Commission from 11 June 2013 to 14 June 2013 exceed the limit set in Article 1 of Implementing Regulation (EU) No 505/2013. |
| --- | --- |

(1)

The quantities covered by certificate applications for out-of-quota sugar submitted from 4 June 2013 to 11 June 2013 and notified to the Commission from 11 June 2013 to 14 June 2013 exceed the limit set in Article 1 of Implementing Regulation (EU) No 505/2013.

| (2) | Therefore, in accordance with Article 5 of Implementing Regulation (EU) No 505/2013 it is necessary to fix an allocation coefficient, which the Member States shall apply to the quantities covered by each notified certificate application. |
| --- | --- |

(2)

Therefore, in accordance with Article 5 of Implementing Regulation (EU) No 505/2013 it is necessary to fix an allocation coefficient, which the Member States shall apply to the quantities covered by each notified certificate application.

| (3) | In order to ensure the efficient management of the measure, this Regulation should enter into force on the day of its publication in the Official Journal of the European Union, |
| --- | --- |

(3)

In order to ensure the efficient management of the measure, this Regulation should enter into force on the day of its publication in the Official Journal of the European Union,

HAS ADOPTED THIS REGULATION:

Article 1

The quantities for which certificates applications for out-of-quota sugar have been submitted in accordance with Implementing Regulation (EU) No 505/2013 from 4 June 2013 to 11 June 2013 and notified to the Commission from 11 June 2013 to 14 June 2013 shall be multiplied by an allocation coefficient of 22,108861 %.

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 19 June 2013.

For the Commission, On behalf of the President,

Jerzy PLEWA

Director-General for Agriculture and Rural Development

---

(1)  
  OJ L 299, 16.11.2007, p. 1.

1

(2)  
  OJ L 147, 1.6.2013, p. 3.

2

---

DECISIONS

| 20.6.2013 | EN | Official Journal of the European Union | L 168/30 |
| --- | --- | --- | --- |

20.6.2013

EN

Official Journal of the European Union

L 168/30

---

COMMISSION DECISION

of 19 September 2012

on the State aid SA.31883 (2011/C) (ex N 516/10) which Austria implemented and is planning to implement for Österreichische Volksbanken AG

(notified under document C(2012) 6307)

(Only the German text is authentic)

(Text with EEA relevance)

(2013/298/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,

Having called on interested parties to submit their comments pursuant to those provision(s), (1)

Whereas:

1.   PROCEDURE

PROCEDURE

| (1) | On 9 December 2008 (2) the Commission approved the Austrian bank support scheme, which was subsequently prolonged four times (3) and expired on 30 June 2011. |
| --- | --- |

(1)

On 9 December 2008 (2) the Commission approved the Austrian bank support scheme, which was subsequently prolonged four times (3) and expired on 30 June 2011.

2

3

| (2) | In April 2009 Österreichische Volksbanken-AG ("ÖVAG") was recapitalised with EUR 1 billion under the Austrian bank support scheme. In addition, ÖVAG placed three issues of debt instruments which were State guaranteed under that scheme in the market, each of EUR 1 billion, on 9 February, 18 March and 14 September 2009 respectively. Austria provided those aid measures under the assumption that ÖVAG was a sound bank and submitted a viability plan on 29 September 2009. |
| --- | --- |

(2)

In April 2009 Österreichische Volksbanken-AG ("ÖVAG") was recapitalised with EUR 1 billion under the Austrian bank support scheme. In addition, ÖVAG placed three issues of debt instruments which were State guaranteed under that scheme in the market, each of EUR 1 billion, on 9 February, 18 March and 14 September 2009 respectively. Austria provided those aid measures under the assumption that ÖVAG was a sound bank and submitted a viability plan on 29 September 2009.

| (3) | Further analysis by the Commission led it to conclude that the application of the criteria laid down in the Annex to the Commission Communication on the recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition (4) ("Recapitalisation Communication") indicated that the bank could not be considered as sound in the meaning of that Communication at the moment of the recapitalisation. Therefore a restructuring plan was requested. Austria, while maintaining its position that the bank had been sound, submitted a restructuring plan for ÖVAG on 2 November 2010 ("initial restructuring plan"). That plan was subsequently supplemented by a number of information submissions. |
| --- | --- |

(3)

Further analysis by the Commission led it to conclude that the application of the criteria laid down in the Annex to the Commission Communication on the recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition (4) ("Recapitalisation Communication") indicated that the bank could not be considered as sound in the meaning of that Communication at the moment of the recapitalisation. Therefore a restructuring plan was requested. Austria, while maintaining its position that the bank had been sound, submitted a restructuring plan for ÖVAG on 2 November 2010 ("initial restructuring plan"). That plan was subsequently supplemented by a number of information submissions.

4

| (4) | By letter dated 9 December 2011, (5) the Commission informed Austria that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union ("the Treaty") in respect of the recapitalisation of EUR 1 billion and the guarantee of EUR 3 billion granted by Austria in favour of ÖVAG and requested Austria to submit an amended restructuring plan. |
| --- | --- |

(4)

By letter dated 9 December 2011, (5) the Commission informed Austria that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union ("the Treaty") in respect of the recapitalisation of EUR 1 billion and the guarantee of EUR 3 billion granted by Austria in favour of ÖVAG and requested Austria to submit an amended restructuring plan.

5

| (5) | The Commission Decision to initiate the procedure ("opening Decision") was published in the Official Journal of the European Union on 17 February 2012. The Commission called on interested parties to submit their comments. |
| --- | --- |

(5)

The Commission Decision to initiate the procedure ("opening Decision") was published in the Official Journal of the European Union on 17 February 2012. The Commission called on interested parties to submit their comments.

| (6) | The Commission received no comments from interested parties. |
| --- | --- |

(6)

The Commission received no comments from interested parties.

| (7) | On 28 March 2012 Austria notified a restructuring plan, which was preceded by several submissions of information, in particular on 16 December 2011 and 1, 13 and 16 March 2012. |
| --- | --- |

(7)

On 28 March 2012 Austria notified a restructuring plan, which was preceded by several submissions of information, in particular on 16 December 2011 and 1, 13 and 16 March 2012.

| (8) | The new restructuring plan and the aid measures were discussed between Austria and the Commission in a series of meetings, teleconferences and other information exchanges during the period from April 2012 until August 2012. The final version of the new restructuring plan was submitted on 4 September 2012 ("new restructuring plan"). |
| --- | --- |

(8)

The new restructuring plan and the aid measures were discussed between Austria and the Commission in a series of meetings, teleconferences and other information exchanges during the period from April 2012 until August 2012. The final version of the new restructuring plan was submitted on 4 September 2012 ("new restructuring plan").

| (9) | On 4 September 2012 Austria submitted commitments, which are attached in the Annex to this Decision. |
| --- | --- |

(9)

On 4 September 2012 Austria submitted commitments, which are attached in the Annex to this Decision.

2.   DESCRIPTION

DESCRIPTION

2.1.   Beneficiary and its difficulties

Beneficiary and its difficulties

| (10) | ÖVAG is the central institute of Austria's Volksbanken (local credit co-operatives) providing them with centralized back-office services, liquidity management and financial products. Volksbanken are universal banks whose activities are local to regional in scope. Together with ÖVAG as their central institution they form the Volksbank group. 60,2 % of ÖVAG is owned by them through a common holding entity. Other owners are DZ Bank (23,8 %), ERGO Versicherungsgruppe AG (9,5 %) and Raiffeisen Zentralbank Österreich AG ("RZB", the central institute of the Raiffeisen group, the second Austrian cooperative group) (5,8 %). The remaining 0,6 % is in free float. (6) At the end of 2008 ÖVAG was the fourth-largest bank in Austria with a balance sheet total of EUR 52,9 billion (7), an Aa3 rating from Moody's and an A rating from Fitch. (8) |
| --- | --- |

(10)

ÖVAG is the central institute of Austria's Volksbanken (local credit co-operatives) providing them with centralized back-office services, liquidity management and financial products. Volksbanken are universal banks whose activities are local to regional in scope. Together with ÖVAG as their central institution they form the Volksbank group. 60,2 % of ÖVAG is owned by them through a common holding entity. Other owners are DZ Bank (23,8 %), ERGO Versicherungsgruppe AG (9,5 %) and Raiffeisen Zentralbank Österreich AG ("RZB", the central institute of the Raiffeisen group, the second Austrian cooperative group) (5,8 %). The remaining 0,6 % is in free float. (6) At the end of 2008 ÖVAG was the fourth-largest bank in Austria with a balance sheet total of EUR 52,9 billion (7), an Aa3 rating from Moody's and an A rating from Fitch. (8)

6

7

8

| (11) | ÖVAG's main geographic market is Austria. The bank was also active in a number of Central and Eastern European countries (CEE), where its market shares were, except for Romania, small. To a limited extent ÖVAG is also active in Germany in corporate banking and real estate financing. |
| --- | --- |

(11)

ÖVAG's main geographic market is Austria. The bank was also active in a number of Central and Eastern European countries (CEE), where its market shares were, except for Romania, small. To a limited extent ÖVAG is also active in Germany in corporate banking and real estate financing.

| (12) | Until recently, ÖVAG operated in five business segments: corporate banking, retail banking, real estate, financial markets and banking book/other operations. ÖVAG abandoned public finance and infrastructure financing in 2008 when it sold its stake in Kommunalkredit Austria AG ("KA") to the Republic of Austria for the nominal amount of EUR 1. More details of the previous business model of ÖVAG are provided in the opening Decision. (9) |
| --- | --- |

(12)

Until recently, ÖVAG operated in five business segments: corporate banking, retail banking, real estate, financial markets and banking book/other operations. ÖVAG abandoned public finance and infrastructure financing in 2008 when it sold its stake in Kommunalkredit Austria AG ("KA") to the Republic of Austria for the nominal amount of EUR 1. More details of the previous business model of ÖVAG are provided in the opening Decision. (9)

9

| (13) | The sources of ÖVAG's difficulties were manifold. As already identified in the opening Decision (10) the following factors contributed to ÖVAG's difficulties: its exposure to CEE countries through its retail banking subsidiaries grouped in VB International AG ("VBI"); its engagement in public finance and infrastructure financing; real estate activities; an investment portfolio containing among others instruments issued by Lehman Brothers and Icelandic banks; and reliance on wholesale funding. Those factors led to significant losses of ÖVAG in 2008 and 2009 and resulted in the support measures granted to the bank by Austria in 2009. |
| --- | --- |

(13)

The sources of ÖVAG's difficulties were manifold. As already identified in the opening Decision (10) the following factors contributed to ÖVAG's difficulties: its exposure to CEE countries through its retail banking subsidiaries grouped in VB International AG ("VBI"); its engagement in public finance and infrastructure financing; real estate activities; an investment portfolio containing among others instruments issued by Lehman Brothers and Icelandic banks; and reliance on wholesale funding. Those factors led to significant losses of ÖVAG in 2008 and 2009 and resulted in the support measures granted to the bank by Austria in 2009.

10

| (14) | ÖVAG had already initiated a restructuring process in 2009, which among others aimed at separating the bank from the activities which were the main source of its problems. Nevertheless, some of the risks stemming from the legacy portfolio affected the bank again in 2011. In particular they were:






  (a) | losses generated by the VBI subsidiaries and impairments on their book value in ÖVAG's accounts totalling EUR 380 million; |
| --- | --- | --- |

(14)

ÖVAG had already initiated a restructuring process in 2009, which among others aimed at separating the bank from the activities which were the main source of its problems. Nevertheless, some of the risks stemming from the legacy portfolio affected the bank again in 2011. In particular they were:

(a)

losses generated by the VBI subsidiaries and impairments on their book value in ÖVAG's accounts totalling EUR 380 million;

| (b) | impairments of EUR 300 million on ÖVAG's investments linked to the countries most affected by the sovereign crisis; |
| --- | --- |

(b)

impairments of EUR 300 million on ÖVAG's investments linked to the countries most affected by the sovereign crisis;

| (c) | write-down of the remaining participation capital which ÖVAG held in KA, at an amount of EUR 142 million; |
| --- | --- |

(c)

write-down of the remaining participation capital which ÖVAG held in KA, at an amount of EUR 142 million;

| (d) | revaluation of Investkredit's (11) ("IK") book value by minus EUR 323 million in the context of the merger by absorption by ÖVAG. |
| --- | --- |

(d)

revaluation of Investkredit's (11) ("IK") book value by minus EUR 323 million in the context of the merger by absorption by ÖVAG.

11

| (15) | The impact of the losses listed in recital 14 led to the second rescue of ÖVAG by Austria, agreed with the original shareholders on 27 February 2012. Further, ÖVAG reviewed its initial restructuring plan and decided for a more profound restructuring. |
| --- | --- |

(15)

The impact of the losses listed in recital 14 led to the second rescue of ÖVAG by Austria, agreed with the original shareholders on 27 February 2012. Further, ÖVAG reviewed its initial restructuring plan and decided for a more profound restructuring.

2.2.   The aid measures

The aid measures

2.2.1.   Aid measures of 2009

Aid measures of 2009

| (16) | In 2009 the liquidity and capital position of ÖVAG was strengthened under the Austrian bank support scheme by means of a EUR 1 billion recapitalisation and State guarantees covering EUR 3 billion of debt instruments. Thanks to the implementation of the recapitalisation the tier-1 ratio of ÖVAG was increased to 9,2 % and the equity ratio to 12,5 % as of the end of 2009. |
| --- | --- |

(16)

In 2009 the liquidity and capital position of ÖVAG was strengthened under the Austrian bank support scheme by means of a EUR 1 billion recapitalisation and State guarantees covering EUR 3 billion of debt instruments. Thanks to the implementation of the recapitalisation the tier-1 ratio of ÖVAG was increased to 9,2 % and the equity ratio to 12,5 % as of the end of 2009.

The recapitalisation of EUR 1 billion

The recapitalisation of EUR 1 billion

| (17) | In April 2009, Austria subscribed participation certificates (Partizipationsscheine, "PS") of ÖVAG amounting to EUR 1 billion ("2009 recapitalisation"). By means of that instrument the State does not obtain voting rights but a preferential coupon and a conversion option. The instrument is perpetual and is treated as core tier-1 capital. |
| --- | --- |

(17)

In April 2009, Austria subscribed participation certificates (Partizipationsscheine, "PS") of ÖVAG amounting to EUR 1 billion ("2009 recapitalisation"). By means of that instrument the State does not obtain voting rights but a preferential coupon and a conversion option. The instrument is perpetual and is treated as core tier-1 capital.

Partizipationsscheine

| (18) | The PS have, as laid down in the Austrian bank support scheme, a preferential coupon of 9,3 % p.a. In the sixth and seventh full financial year after the subscription of the instruments the coupon increases yearly by 50 basis points, in the eighth year by 75 basis points and from the ninth financial year onwards by 100 basis points, but only to the maximum of 12-month EURIBOR plus 1 000 basis points p.a. The payment of the coupon is subject to the bank showing a profit and ÖVAG's decision to distribute it. Coupons not paid in one year are not deferred to a later year. The PS absorb losses in proportion to the total loss-absorbing capital. |
| --- | --- |

(18)

The PS have, as laid down in the Austrian bank support scheme, a preferential coupon of 9,3 % p.a. In the sixth and seventh full financial year after the subscription of the instruments the coupon increases yearly by 50 basis points, in the eighth year by 75 basis points and from the ninth financial year onwards by 100 basis points, but only to the maximum of 12-month EURIBOR plus 1 000 basis points p.a. The payment of the coupon is subject to the bank showing a profit and ÖVAG's decision to distribute it. Coupons not paid in one year are not deferred to a later year. The PS absorb losses in proportion to the total loss-absorbing capital.

| (19) | The bank has the right to redeem all or tranches of the PS at any time. The redemption value in the first ten financial years from the subscription amounts to 100 % of the nominal value of the participation certificates, and thereafter to 150 %. (12) |
| --- | --- |

(19)

The bank has the right to redeem all or tranches of the PS at any time. The redemption value in the first ten financial years from the subscription amounts to 100 % of the nominal value of the participation certificates, and thereafter to 150 %. (12)

12

| (20) | The State has the right to convert the PS into ordinary shares of ÖVAG. Although until 1 January 2019 such a conversion is subject to agreement by the bank, the bank's consent to the conversion is not necessary in the following cases:






  (a) | the dividend for the financial year 2011 is not paid out fully or partially; or |
| --- | --- | --- |

(20)

The State has the right to convert the PS into ordinary shares of ÖVAG. Although until 1 January 2019 such a conversion is subject to agreement by the bank, the bank's consent to the conversion is not necessary in the following cases:

(a)

the dividend for the financial year 2011 is not paid out fully or partially; or

| (b) | for two consecutive years after 31 December 2011 the dividend is not paid out fully or partially; or |
| --- | --- |

(b)

for two consecutive years after 31 December 2011 the dividend is not paid out fully or partially; or

| (c) | on 1 January 2012 the State still holds PS with a nominal value of at least EUR 700 million; or |
| --- | --- |

(c)

on 1 January 2012 the State still holds PS with a nominal value of at least EUR 700 million; or

| (d) | on 1 January 2015 the State still holds PS with a nominal value of at least EUR 400 million. |
| --- | --- |

(d)

on 1 January 2015 the State still holds PS with a nominal value of at least EUR 400 million.

Guarantees covering new issuance of debt

Guarantees covering new issuance of debt

| (21) | ÖVAG benefited from government guarantees under the Austrian bank support scheme and issued EUR 3 billion of State-guaranteed bonds in 2009.

  Table 1


  ÖVAG's State-guaranteed debt issues in 2009











  Tranche | Nominal value | Date of issue | Maturity | Coupon | Total cost |
| --- | --- | --- | --- | --- | --- | --- |
| 1. | EUR 1 billion | 9.2.2009 | 9.2.2012 | 3.000 % | 157 basis points over 6M Euribor |
| 2. | EUR 1 billion | 18.3.2009 | 19.3.2013 | 3.375 % | 194 basis points over 6M Euribor |
| 3. | EUR 1 billion | 14.9.2009 | 14.9.2012 | 2.250 % | 155 basis points over 6M Euribor |
| Source: New restructuring plan, p. 36. |

(21)

ÖVAG benefited from government guarantees under the Austrian bank support scheme and issued EUR 3 billion of State-guaranteed bonds in 2009.

Table 1

Table 1

ÖVAG's State-guaranteed debt issues in 2009

ÖVAG's State-guaranteed debt issues in 2009

Tranche

Nominal value

Date of issue

Maturity

Coupon

Total cost

1.

EUR 1 billion

9.2.2009

9.2.2012

3.000 %

157 basis points over 6M Euribor

2.

EUR 1 billion

18.3.2009

19.3.2013

3.375 %

194 basis points over 6M Euribor

3.

EUR 1 billion

14.9.2009

14.9.2012

2.250 %

155 basis points over 6M Euribor

Source: New restructuring plan, p. 36.

Source:

2.2.2.   Aid measures of 2012

Aid measures of 2012

| (22) | The magnitude of the losses reported by ÖVAG for 2011 will lead to further State aid measures, which consist of a EUR 250 million capital injection by the State in form of ordinary shares ("2012 recapitalisation") and an asset guarantee with the effect of increasing the capital by EUR 100 million ("asset guarantee"). |
| --- | --- |

(22)

The magnitude of the losses reported by ÖVAG for 2011 will lead to further State aid measures, which consist of a EUR 250 million capital injection by the State in form of ordinary shares ("2012 recapitalisation") and an asset guarantee with the effect of increasing the capital by EUR 100 million ("asset guarantee").

Capital increase by EUR 250 million

Capital increase by EUR 250 million

| (23) | The capital increase is to be conducted in two steps. First, the bank's capital is reduced by 70 % to offset the accumulated losses. That capital cut also reduces pro rata the PS which Austria injected in 2009. In a second step, ÖVAG receives fresh capital totalling EUR 484 million. EUR 250 million thereof is to be subscribed by Austria, the rest by the Volksbanken. Austria and the Volksbanken will subscribe the shares at the price of EUR 2,181 per share. As a result, the State will obtain a 43,4 % stake in the bank and become the second-biggest shareholder after the Volksbanken (50,2 %). The stakes of the other shareholders, which do not participate in the capital injection, will be diluted: DZ-Bank 3,8 %, ERGO 1,5 %, RZB 0,9 %, free float 0,1 %. |
| --- | --- |

(23)

The capital increase is to be conducted in two steps. First, the bank's capital is reduced by 70 % to offset the accumulated losses. That capital cut also reduces pro rata the PS which Austria injected in 2009. In a second step, ÖVAG receives fresh capital totalling EUR 484 million. EUR 250 million thereof is to be subscribed by Austria, the rest by the Volksbanken. Austria and the Volksbanken will subscribe the shares at the price of EUR 2,181 per share. As a result, the State will obtain a 43,4 % stake in the bank and become the second-biggest shareholder after the Volksbanken (50,2 %). The stakes of the other shareholders, which do not participate in the capital injection, will be diluted: DZ-Bank 3,8 %, ERGO 1,5 %, RZB 0,9 %, free float 0,1 %.

Asset guarantee

Asset guarantee

| (24) | In addition to the capital injection of EUR 250 million, Austria will provide an asset guarantee of EUR 100 million, which will have the effect of increasing the capital of ÖVAG by the same amount, and which will be remunerated at 10 % p.a. (i.e. like a capital injection). The aim of the asset guarantee is to reduce the provisioning or write-down needs of the bank and to protect its capital base. The measure differs from standard impaired asset measures because the guarantee will be structured in such a manner that it will influence the loan-loss provisions the bank had already made for expected losses on the covered assets. The guarantee will therefore be given for (book) losses that have already occurred. |
| --- | --- |

(24)

In addition to the capital injection of EUR 250 million, Austria will provide an asset guarantee of EUR 100 million, which will have the effect of increasing the capital of ÖVAG by the same amount, and which will be remunerated at 10 % p.a. (i.e. like a capital injection). The aim of the asset guarantee is to reduce the provisioning or write-down needs of the bank and to protect its capital base. The measure differs from standard impaired asset measures because the guarantee will be structured in such a manner that it will influence the loan-loss provisions the bank had already made for expected losses on the covered assets. The guarantee will therefore be given for (book) losses that have already occurred.

| (25) | ÖVAG will be able to draw the guarantee and request the recourse from the State (the guarantor) if it provides evidence that the debt is irrecoverable or that the debtor entered formal insolvency proceedings and only if and as far as the recourse is necessary to avoid that the Common Equity Tier 1 (13) ("CET1") ratio of ÖVAG group (14) falls below a level of 11 % by 31 December 2015. That CET1-threshold is lowered to 10 % if by the same date ÖVAG has sold its shares in Volksbank Romania S.A ("VBRO") or in VB Leasing International Holding GmbH ("VBLI") completely. |
| --- | --- |

(25)

ÖVAG will be able to draw the guarantee and request the recourse from the State (the guarantor) if it provides evidence that the debt is irrecoverable or that the debtor entered formal insolvency proceedings and only if and as far as the recourse is necessary to avoid that the Common Equity Tier 1 (13) ("CET1") ratio of ÖVAG group (14) falls below a level of 11 % by 31 December 2015. That CET1-threshold is lowered to 10 % if by the same date ÖVAG has sold its shares in Volksbank Romania S.A ("VBRO") or in VB Leasing International Holding GmbH ("VBLI") completely.

13

14

| (26) | Recourse under the guarantee will not be allowed before 31 December 2015. Incoming payments related to the covered assets are to be charged against any claim which the bank might have against the State, if they exceed the non-impaired and non-guaranteed value of the asset. |
| --- | --- |

(26)

Recourse under the guarantee will not be allowed before 31 December 2015. Incoming payments related to the covered assets are to be charged against any claim which the bank might have against the State, if they exceed the non-impaired and non-guaranteed value of the asset.

| (27) | The payment obligations of the State resulting from the guarantee being called will be deferred until 31 July 2016 without any interest charged for deferred payment. Any amounts drawn need to be repaid to the State as soon as the financial situation of the bank allows for it. |
| --- | --- |

(27)

The payment obligations of the State resulting from the guarantee being called will be deferred until 31 July 2016 without any interest charged for deferred payment. Any amounts drawn need to be repaid to the State as soon as the financial situation of the bank allows for it.

| (28) | The guarantee will be remunerated with a fee of 10 % p.a. (15) on the total amount granted from 30 September 2012 to 1 January 2016. For the amounts called upon, that remuneration will be replaced by a fee of 10 % p.a. which will be paid from the moment the amounts are called upon until the amount called upon is fully repaid to the State. The latter remuneration is linked to the bank making profits and complying with a CET1 ratio of 10 % and is not cumulative. |
| --- | --- |

(28)

The guarantee will be remunerated with a fee of 10 % p.a. (15) on the total amount granted from 30 September 2012 to 1 January 2016. For the amounts called upon, that remuneration will be replaced by a fee of 10 % p.a. which will be paid from the moment the amounts are called upon until the amount called upon is fully repaid to the State. The latter remuneration is linked to the bank making profits and complying with a CET1 ratio of 10 % and is not cumulative.

15

| (29) | The liability of the State under that guarantee will expire on 1 January 2016 with the exception of any claim that has been raised before that date. |
| --- | --- |

(29)

The liability of the State under that guarantee will expire on 1 January 2016 with the exception of any claim that has been raised before that date.

2.3.   The new business model

The new business model

Overview

Overview

| (30) | According to the new restructuring plan ÖVAG will integrate closely with the Volksbanken. A system of joint liability ("Verbundmodell") will be established between ÖVAG and the Volksbanken. ÖVAG is reduced to the functions of a central institute of the Volksbanken sector. It will concentrate on providing services to the Volksbanken by pooling liquidity, assisting in the provision of larger-scale loans and offering treasury products for the Volksbanken and their clients. Thereby, its balance sheet total as well as the complexity of its business model will be reduced significantly. The activities which created the bank's problems or do not fall within the scope of activities of a Volksbanken central institute are in run-down or will be divested. The bank bundles those activities in an internal non-core segment. |
| --- | --- |

(30)

According to the new restructuring plan ÖVAG will integrate closely with the Volksbanken. A system of joint liability ("Verbundmodell") will be established between ÖVAG and the Volksbanken. ÖVAG is reduced to the functions of a central institute of the Volksbanken sector. It will concentrate on providing services to the Volksbanken by pooling liquidity, assisting in the provision of larger-scale loans and offering treasury products for the Volksbanken and their clients. Thereby, its balance sheet total as well as the complexity of its business model will be reduced significantly. The activities which created the bank's problems or do not fall within the scope of activities of a Volksbanken central institute are in run-down or will be divested. The bank bundles those activities in an internal non-core segment.

| (31) | The balance sheet will be reduced from EUR 91 billion at the end of September 2008 (16) to EUR 19 billion in 2017, of which EUR [12-15] (*1) billion will belong to the new core business (the remainder being non-core business in run-down). The risk-weighted assets ("RWA") will decrease from EUR 35,2 billion in 2008 to EUR [9-12] billion in 2017 in the base case. |
| --- | --- |

(31)

The balance sheet will be reduced from EUR 91 billion at the end of September 2008 (16) to EUR 19 billion in 2017, of which EUR [12-15] (*1) billion will belong to the new core business (the remainder being non-core business in run-down). The risk-weighted assets ("RWA") will decrease from EUR 35,2 billion in 2008 to EUR [9-12] billion in 2017 in the base case.

16

*1

The Verbundmodell

The Verbundmodell

| (32) | The "Verbundmodell" is a system of joint liability with a well-regulated transfer of liquidity between its members ("Liquiditätsverbund"), combined with a joint financial protection of the creditors of all members ("Haftungsverbund"). At the same time the Verbundmodell provides for the maintenance of the legal independence of the associated banks while allowing its members to make use of the shared organisational infrastructure of the "network". |
| --- | --- |

(32)

The "Verbundmodell" is a system of joint liability with a well-regulated transfer of liquidity between its members ("Liquiditätsverbund"), combined with a joint financial protection of the creditors of all members ("Haftungsverbund"). At the same time the Verbundmodell provides for the maintenance of the legal independence of the associated banks while allowing its members to make use of the shared organisational infrastructure of the "network".

| (33) | In that context, ÖVAG as the central institute is to ensure and to control the solvability and the liquidity of the co-operative banks which are part of the "Verbund" on the basis of consolidated accounts. Furthermore, ÖVAG is, amongst others, responsible for the representation of the interest of the group as a whole, for public relations on a group level and for support in certain back-office functions as for instance transactions in securities, logistics, setting of group standards for compliance and anti-money laundering. In addition, the bank will be assigned further functions ("Verbundfunktionen") that seem necessary from a regulatory point of view for the group as a whole or for efficiency reasons. They include in particular responsibility for compliance with those regulatory requirements which have to be respected collectively (for instance solvability, liquidity, internal capital adequacy process for the "Verbund", internal audit). They also include provision of support for the sales and marketing of (individualised) products. |
| --- | --- |

(33)

In that context, ÖVAG as the central institute is to ensure and to control the solvability and the liquidity of the co-operative banks which are part of the "Verbund" on the basis of consolidated accounts. Furthermore, ÖVAG is, amongst others, responsible for the representation of the interest of the group as a whole, for public relations on a group level and for support in certain back-office functions as for instance transactions in securities, logistics, setting of group standards for compliance and anti-money laundering. In addition, the bank will be assigned further functions ("Verbundfunktionen") that seem necessary from a regulatory point of view for the group as a whole or for efficiency reasons. They include in particular responsibility for compliance with those regulatory requirements which have to be respected collectively (for instance solvability, liquidity, internal capital adequacy process for the "Verbund", internal audit). They also include provision of support for the sales and marketing of (individualised) products.

| (34) | Pursuant to the Austrian Banking Act (17) the system of joint liability means that ÖVAG in its role as central institute is assuming liability for the entirety of obligations of the "Verbund" whereas the liability of the individual co-operative banks for the Verbund is limited to the part of their own funds exceeding the regulatory minimum required for the coverage of their own RWA. That "excess capital" of all co-operative banks of the "Verbund" by 31 December 2011 amounts to EUR [450-500] million if calculated on the basis of a ratio of 8 % CET1 and to EUR [600-650] million if calculated on the basis of 7 % CET1. |
| --- | --- |

(34)

Pursuant to the Austrian Banking Act (17) the system of joint liability means that ÖVAG in its role as central institute is assuming liability for the entirety of obligations of the "Verbund" whereas the liability of the individual co-operative banks for the Verbund is limited to the part of their own funds exceeding the regulatory minimum required for the coverage of their own RWA. That "excess capital" of all co-operative banks of the "Verbund" by 31 December 2011 amounts to EUR [450-500] million if calculated on the basis of a ratio of 8 % CET1 and to EUR [600-650] million if calculated on the basis of 7 % CET1.

17

| (35) | Another important feature of the Verbundmodell is that of liquidity cooperation. That liquidity cooperation under the terms of the Austrian law means among others that the co-operative banks are obliged to keep 14 % of their deposits with ÖVAG as a minimum reserve. In addition, ÖVAG can pool collateral coming from the Volksbanken (mortgage loans) which then can be used for covered bond funding. Currently, the co-operative banks hold EUR [2,5-5] billion of assets which can potentially be used as such collateral. A further significant element to ensure a stable liquidity position of ÖVAG was the transfer of the online banking platform Livebank from one of the local Volksbanken to ÖVAG in 2011. This will on the one hand provide ÖVAG with direct access to retail deposits and thus reduce its reliance on wholesale funding, which was one of the sources of ÖVAG's problems. On the other hand it will allow for a centralised online banking appearance of the Volksbanken sector, in line with the Verbundmodell. |
| --- | --- |

(35)

Another important feature of the Verbundmodell is that of liquidity cooperation. That liquidity cooperation under the terms of the Austrian law means among others that the co-operative banks are obliged to keep 14 % of their deposits with ÖVAG as a minimum reserve. In addition, ÖVAG can pool collateral coming from the Volksbanken (mortgage loans) which then can be used for covered bond funding. Currently, the co-operative banks hold EUR [2,5-5] billion of assets which can potentially be used as such collateral. A further significant element to ensure a stable liquidity position of ÖVAG was the transfer of the online banking platform Livebank from one of the local Volksbanken to ÖVAG in 2011. This will on the one hand provide ÖVAG with direct access to retail deposits and thus reduce its reliance on wholesale funding, which was one of the sources of ÖVAG's problems. On the other hand it will allow for a centralised online banking appearance of the Volksbanken sector, in line with the Verbundmodell.

The core segment

The core segment

| (36) | The core segment consists of three divisions: Credit/Underwriting business, Financial Markets and Banking book/Other items. ÖVAG expects the total assets of the core segment to total EUR [12-15] billion in 2017 (EUR 16,8 billion at the end of 2012) and RWA of [4-6] billion by the end of 2017. |
| --- | --- |

(36)

The core segment consists of three divisions: Credit/Underwriting business, Financial Markets and Banking book/Other items. ÖVAG expects the total assets of the core segment to total EUR [12-15] billion in 2017 (EUR 16,8 billion at the end of 2012) and RWA of [4-6] billion by the end of 2017.

| (37) | The segment Credit/Underwriting Business comprises three units Credit Verbundbank, VB Factoring and Product Leasing ("Mobilienleasing") Austria ("VBLF"). ÖVAG considers that business part of its core business with the co-operative banks. The business activities are focused on Austria. |
| --- | --- |

(37)

The segment Credit/Underwriting Business comprises three units Credit Verbundbank, VB Factoring and Product Leasing ("Mobilienleasing") Austria ("VBLF"). ÖVAG considers that business part of its core business with the co-operative banks. The business activities are focused on Austria.

| (38) | Credit Verbundbank comprises the credit and syndicated loans business with the Verbundbanken (18). The services provided by the two subsidiaries VB Factoring and VBLF are considered as central functions for the "Verbund" as well. VBLF is one of the major providers of leasing services in the field of cars, trucks and office automation in Austria. Due to its inter-linkage with the co-operative banks VBLF will be part of ÖVAG's future business strategy. VB Factoring, a wholly-owned subsidiary of ÖVAG, provides services for the major part of the factoring business carried out by the co-operative banks. |
| --- | --- |

(38)

Credit Verbundbank comprises the credit and syndicated loans business with the Verbundbanken (18). The services provided by the two subsidiaries VB Factoring and VBLF are considered as central functions for the "Verbund" as well. VBLF is one of the major providers of leasing services in the field of cars, trucks and office automation in Austria. Due to its inter-linkage with the co-operative banks VBLF will be part of ÖVAG's future business strategy. VB Factoring, a wholly-owned subsidiary of ÖVAG, provides services for the major part of the factoring business carried out by the co-operative banks.

18

| (39) | The division Financial Markets comprises in particular the units Group treasury, Volksbank investments, Immo KAG and Online Banking (Livebank). Financial Markets is responsible for the management of short- and long-term liquidity, trading of securities and foreign exchange trading as well as for controlling of liquidity and market price risks. In addition, it is a provider of products for the co-operative banks and for domestic and foreign institutional clients. |
| --- | --- |

(39)

The division Financial Markets comprises in particular the units Group treasury, Volksbank investments, Immo KAG and Online Banking (Livebank). Financial Markets is responsible for the management of short- and long-term liquidity, trading of securities and foreign exchange trading as well as for controlling of liquidity and market price risks. In addition, it is a provider of products for the co-operative banks and for domestic and foreign institutional clients.

| (40) | The division Banking book/Other items consists of the units Capital Markets and Asset Liability Management. In addition, the activities of the company VB Services für Banken GesmbH (an outsourced service provider) and of various holding companies have been assigned to that segment. |
| --- | --- |

(40)

The division Banking book/Other items consists of the units Capital Markets and Asset Liability Management. In addition, the activities of the company VB Services für Banken GesmbH (an outsourced service provider) and of various holding companies have been assigned to that segment.

The non-core segment

The non-core segment

| (41) | The non-core segment comprises the entirety of participations and former business areas which are no longer part of ÖVAG's core business. The total assets of that segment are budgeted with EUR 11,7 billion (RWA: EUR 11,0 billion) in 2012 and with EUR [3-5] billion (RWA: EUR [3-5] billion) in 2017. ÖVAG expects to reduce the RWA of that segment to less than EUR 1 billion by 2026. The portfolios assigned to that segment are in run-down or will be divested. |
| --- | --- |

(41)

The non-core segment comprises the entirety of participations and former business areas which are no longer part of ÖVAG's core business. The total assets of that segment are budgeted with EUR 11,7 billion (RWA: EUR 11,0 billion) in 2012 and with EUR [3-5] billion (RWA: EUR [3-5] billion) in 2017. ÖVAG expects to reduce the RWA of that segment to less than EUR 1 billion by 2026. The portfolios assigned to that segment are in run-down or will be divested.

| (42) | The run-down part of the non-core segment includes in particular the corporate finance portfolio comprising considerable parts of the current Corporate Lending business CEE, the entirety of the Leveraged Finance divisions in Austria and CEE and the business lines International Project Financing and Corporate Banking as far as the latter is not related to the underwriting business with the co-operative banks. The Frankfurt branch will no longer be part of ÖVAG's core portfolio. Moreover, the real estate portfolio as a whole has been put into run-down and will cease to be part of the bank's business model. The real estate portfolio of Europolis, an asset management company active in the field of real estate, was already sold in 2010. |
| --- | --- |

(42)

The run-down part of the non-core segment includes in particular the corporate finance portfolio comprising considerable parts of the current Corporate Lending business CEE, the entirety of the Leveraged Finance divisions in Austria and CEE and the business lines International Project Financing and Corporate Banking as far as the latter is not related to the underwriting business with the co-operative banks. The Frankfurt branch will no longer be part of ÖVAG's core portfolio. Moreover, the real estate portfolio as a whole has been put into run-down and will cease to be part of the bank's business model. The real estate portfolio of Europolis, an asset management company active in the field of real estate, was already sold in 2010.

| (43) | Another part of that segment is VBLI, a leasing subsidiary which is 50 % owned by ÖVAG. (19) VBLI group conducts leasing business in eight CEE and South-East European countries. It also holds a minority stake of about 8 % in a leasing company in Hungary whose main stake holder is VR-Leasing. VBLI was a complementary business to the international credit business conducted by VBI. Due to the discontinuation of the international banking activities the bank intends to sell its participation in VBLI by 31 December [2013-2017]. In order to facilitate the sale, ÖVAG has already written down its participation in its IFRS accounts by [30-60] % to EUR [50-70] million. If a sale of VBLI by the end of 2014 does not seem realistic, all new business will be ceased by 31 December [2013-2017] and VBLI will be liquidated in compliance with the relevant legal framework. (20) |
| --- | --- |

(43)

Another part of that segment is VBLI, a leasing subsidiary which is 50 % owned by ÖVAG. (19) VBLI group conducts leasing business in eight CEE and South-East European countries. It also holds a minority stake of about 8 % in a leasing company in Hungary whose main stake holder is VR-Leasing. VBLI was a complementary business to the international credit business conducted by VBI. Due to the discontinuation of the international banking activities the bank intends to sell its participation in VBLI by 31 December [2013-2017]. In order to facilitate the sale, ÖVAG has already written down its participation in its IFRS accounts by [30-60] % to EUR [50-70] million. If a sale of VBLI by the end of 2014 does not seem realistic, all new business will be ceased by 31 December [2013-2017] and VBLI will be liquidated in compliance with the relevant legal framework. (20)

19

20

| (44) | Another part of the non-core segment is VBRO, which was excluded from the sale of VBI in 2010. Based on its total assets VBRO is the seventh-largest bank in Romania. The bank has been active on the Romanian market with a strong focus on mortgage related credits for retail and smaller business clients, mainly denominated in foreign currencies. VBRO is currently being restructured by ÖVAG. In 2011, the branch structure was reorganised leading to a significant reduction in branches. The number of employees in the branch network was cut by 25 %. In the current environment, the acquisition of deposits and payment transaction services is prioritised, while new lending business is strongly reduced. The new business strategy aims at developing VBRO into a universal bank with a more balanced product mix and a reduction of the comparatively high percentage of mortgage loans in foreign currencies. It is planned to reduce VBRO's dependence on funding by its shareholders and improve the loan-to-deposit ratio. The plan also includes a determined work-out strategy for the non-performing loans. Although VBRO is planning to generate positive results throughout the restructuring period, the restructuring plan assumes more cautiously neutral results. ÖVAG plans to divest VBRO by the end of [2013-2017]. In order to facilitate the sale, ÖVAG has already written down its participation in its IFRS accounts to EUR [0-50]. If a sale of VBRO by the end of [2013-2017] should not seem realistic, all new business will be ceased by 31 December [2013-2017] and VBRO will be liquidated in compliance with the relevant legal framework. (21) Alternatively, parts of VBRO could be sold by 31 December [2013-2017] and only the remaining portfolios be liquidated in compliance with the relevant legal framework. (22) |
| --- | --- |

(44)

Another part of the non-core segment is VBRO, which was excluded from the sale of VBI in 2010. Based on its total assets VBRO is the seventh-largest bank in Romania. The bank has been active on the Romanian market with a strong focus on mortgage related credits for retail and smaller business clients, mainly denominated in foreign currencies. VBRO is currently being restructured by ÖVAG. In 2011, the branch structure was reorganised leading to a significant reduction in branches. The number of employees in the branch network was cut by 25 %. In the current environment, the acquisition of deposits and payment transaction services is prioritised, while new lending business is strongly reduced. The new business strategy aims at developing VBRO into a universal bank with a more balanced product mix and a reduction of the comparatively high percentage of mortgage loans in foreign currencies. It is planned to reduce VBRO's dependence on funding by its shareholders and improve the loan-to-deposit ratio. The plan also includes a determined work-out strategy for the non-performing loans. Although VBRO is planning to generate positive results throughout the restructuring period, the restructuring plan assumes more cautiously neutral results. ÖVAG plans to divest VBRO by the end of [2013-2017]. In order to facilitate the sale, ÖVAG has already written down its participation in its IFRS accounts to EUR [0-50]. If a sale of VBRO by the end of [2013-2017] should not seem realistic, all new business will be ceased by 31 December [2013-2017] and VBRO will be liquidated in compliance with the relevant legal framework. (21) Alternatively, parts of VBRO could be sold by 31 December [2013-2017] and only the remaining portfolios be liquidated in compliance with the relevant legal framework. (22)

21

22

| (45) | Finally, the banking activities in Malta are to be divested by the end of [2013-2017]. If a sale by end [2013-2017] is not achieved, all new business will be ceased by 31 December [2013-2017] and the activities will be liquidated in compliance with the relevant legal framework. (23) Also the participation in RZB will be divested by the end of [2013-2017] at the latest. If the participation in RZB has not been sold by that date, a duly authorised Divestiture Trustee will take over the sales process. (24) |
| --- | --- |

(45)

Finally, the banking activities in Malta are to be divested by the end of [2013-2017]. If a sale by end [2013-2017] is not achieved, all new business will be ceased by 31 December [2013-2017] and the activities will be liquidated in compliance with the relevant legal framework. (23) Also the participation in RZB will be divested by the end of [2013-2017] at the latest. If the participation in RZB has not been sold by that date, a duly authorised Divestiture Trustee will take over the sales process. (24)

23

24

Funding

Funding

| (46) | ÖVAG provided information regarding its liquidity position as of May 2012 and presented measures which address current and future funding needs. |
| --- | --- |

(46)

ÖVAG provided information regarding its liquidity position as of May 2012 and presented measures which address current and future funding needs.

| (47) | As regards its previous reliance on unsecured wholesale funding, ÖVAG claims that it was mainly due to the subsidiaries which relied heavily on the funding provided by ÖVAG. That problem has already been addressed to some extent by the sale of VBI in 2011 (reduction of the financing needs by EUR 1,1 billion). Further, the restructuring of VBRO and its subsequent sale, together with the divestment of VBLI, are to free up a further EUR 2,4 billion of liquidity. |
| --- | --- |

(47)

As regards its previous reliance on unsecured wholesale funding, ÖVAG claims that it was mainly due to the subsidiaries which relied heavily on the funding provided by ÖVAG. That problem has already been addressed to some extent by the sale of VBI in 2011 (reduction of the financing needs by EUR 1,1 billion). Further, the restructuring of VBRO and its subsequent sale, together with the divestment of VBLI, are to free up a further EUR 2,4 billion of liquidity.

| (48) | The bank demonstrated that it has implemented measures which give it access to further sources of funding or ease its liquidity needs. The acquisition of Livebank (from one of the Volksbanken) gave ÖVAG access to EUR 470 million of retail funding, thereby reducing ÖVAG's past reliance on wholesale funding. The measures committed to by the minority shareholders (25) are to contribute to the reducton of the funding needs. Finally, the establishment of the Verbundmodell together with the regional Volksbanken allows ÖVAG to reduce its financing needs by EUR 2,7 billion (26). Additionally, it will be able to use some of the assets held by the associated Volksbanken as collateral for covered bonds if needed (currently EUR [2-4] billion). |
| --- | --- |

(48)

The bank demonstrated that it has implemented measures which give it access to further sources of funding or ease its liquidity needs. The acquisition of Livebank (from one of the Volksbanken) gave ÖVAG access to EUR 470 million of retail funding, thereby reducing ÖVAG's past reliance on wholesale funding. The measures committed to by the minority shareholders (25) are to contribute to the reducton of the funding needs. Finally, the establishment of the Verbundmodell together with the regional Volksbanken allows ÖVAG to reduce its financing needs by EUR 2,7 billion (26). Additionally, it will be able to use some of the assets held by the associated Volksbanken as collateral for covered bonds if needed (currently EUR [2-4] billion).

25

26

2.4.   Contribution of other shareholders and hybrid investors

Contribution of other shareholders and hybrid investors

| (49) | DZ Bank, Ergo and RZB did not participate in the capital injection, but committed to contribute to ÖVAG's rescue and restructuring in the following way:






  (a) | DZ Bank will maintain existing liquidity facilities for the subsidiaries owned in common with ÖVAG (for instance VBLI). Additionally, it will take over the business of ÖVAG's Frankfurt branch (EUR [400-500] million in terms of assets) and the related financing needs. |
| --- | --- | --- |

(49)

DZ Bank, Ergo and RZB did not participate in the capital injection, but committed to contribute to ÖVAG's rescue and restructuring in the following way:

(a)

DZ Bank will maintain existing liquidity facilities for the subsidiaries owned in common with ÖVAG (for instance VBLI). Additionally, it will take over the business of ÖVAG's Frankfurt branch (EUR [400-500] million in terms of assets) and the related financing needs.

| (b) | ERGO will maintain its existing liquidity facilities with ÖVAG and agrees not to sell the financial instruments emanating from ÖVAG held by its insurance arm Victoria. |
| --- | --- |

(b)

ERGO will maintain its existing liquidity facilities with ÖVAG and agrees not to sell the financial instruments emanating from ÖVAG held by its insurance arm Victoria.

| (c) | RZB (will implement measures which will have a positive effect on the capital of ÖVAG in the volume of EUR 100 million and supply additional liquidity to ÖVAG in the amount of EUR 500 million. |
| --- | --- |

(c)

RZB (will implement measures which will have a positive effect on the capital of ÖVAG in the volume of EUR 100 million and supply additional liquidity to ÖVAG in the amount of EUR 500 million.

| (50) | Further, all historic shareholders (27) participate in the losses of the past by way of the capital cut of 70 %. In addition, they have been significantly diluted in the last recapitalisation. (28) Furthermore, the Volksbanken contribute to the recent capital increase with fresh capital totalling to EUR 230 million. |
| --- | --- |

(50)

Further, all historic shareholders (27) participate in the losses of the past by way of the capital cut of 70 %. In addition, they have been significantly diluted in the last recapitalisation. (28) Furthermore, the Volksbanken contribute to the recent capital increase with fresh capital totalling to EUR 230 million.

27

28

| (51) | In order to ensure that the owners of the bank participate in the reconstitution of an adequate capital basis over the restructuring period, the bank will retain dividends and not pay coupons on hybrid capital which it is not legally obliged to pay. It is complemented by a strict limit on dividends which can be disbursed by the co-operative banks over the restructuring period, in order to support the build-up of capital in the "Verbund". |
| --- | --- |

(51)

In order to ensure that the owners of the bank participate in the reconstitution of an adequate capital basis over the restructuring period, the bank will retain dividends and not pay coupons on hybrid capital which it is not legally obliged to pay. It is complemented by a strict limit on dividends which can be disbursed by the co-operative banks over the restructuring period, in order to support the build-up of capital in the "Verbund".

| (52) | ÖVAG provided information on a buy-back exercise regarding hybrid instruments issued by two subsidiaries of ÖVAG at a total amount of EUR 300 million. Between May and July 2012, ÖVAG offered to buy those instruments back from investors at around 40 % of their nominal value. The offered buy-back price was determined on the basis of the market value of the instruments plus a premium of not more than 10 percentage points, which was added to incentivise investors to participate in the buy-back. The transaction was settled in mid-July 2012. It resulted in almost 80 % of the instruments' nominal value being bought back and a profit for ÖVAG after deduction of transaction costs of EUR 129,9 million. |
| --- | --- |

(52)

ÖVAG provided information on a buy-back exercise regarding hybrid instruments issued by two subsidiaries of ÖVAG at a total amount of EUR 300 million. Between May and July 2012, ÖVAG offered to buy those instruments back from investors at around 40 % of their nominal value. The offered buy-back price was determined on the basis of the market value of the instruments plus a premium of not more than 10 percentage points, which was added to incentivise investors to participate in the buy-back. The transaction was settled in mid-July 2012. It resulted in almost 80 % of the instruments' nominal value being bought back and a profit for ÖVAG after deduction of transaction costs of EUR 129,9 million.

2.5.   Financial planning

Financial planning

| (53) | Austria presented a detailed business plan for ÖVAG for the period 2012 to 2017. The plan includes a base case and a stress case scenario with the aim of demonstrating ÖVAG's ability to restore its long-term viability. |
| --- | --- |

(53)

Austria presented a detailed business plan for ÖVAG for the period 2012 to 2017. The plan includes a base case and a stress case scenario with the aim of demonstrating ÖVAG's ability to restore its long-term viability.

Base case

Base case

| (54) | The new restructuring plan is based on assumptions in respect of the evolution of the Euro area, its GDP growth, short-term and mid-term interest rates changes, which are largely in line with the expectations of important market players and international institutions like e.g. the IMF. Euro area inflation, oil prices and the EUR/USD and EUR/CHF exchange rates are part of the assumptions as well. The planning assumes a moderate recovery of GDP growth in 2013 and thereafter. |
| --- | --- |

(54)

The new restructuring plan is based on assumptions in respect of the evolution of the Euro area, its GDP growth, short-term and mid-term interest rates changes, which are largely in line with the expectations of important market players and international institutions like e.g. the IMF. Euro area inflation, oil prices and the EUR/USD and EUR/CHF exchange rates are part of the assumptions as well. The planning assumes a moderate recovery of GDP growth in 2013 and thereafter.

| (55) | As illustrated in Table 2, in the base case ÖVAG is expected to continuously improve its results until 2016.

  Table 2


  Key financial figures of ÖVAG – base case (in EUR million and %, respectively)













  ÖVAG Group | 2012P | 2013P | 2014P | 2015P | 2016P | 2017P | 2018P |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Result (after tax) | [60-80] | [10-30] | – [30-10] | [40-60] | [130-150] | [90-110] | n.a. |
| Return on Equity after taxes | [3-5] | [1-3] | – [3-1] | [3-5] | [10-12] | [8-10] | n.a. |
| Balance sheet total | [20 000 -30 000 ] | [26 000 -28 000 ] | [22 000 -24 000 ] | [20 000 -22 000 ] | [19 000 -21 000 ] | [18 000 -20 000 ] | n.a. |
| RWA | [18 000 -20 000 ] | [16 000 -18 000 ] | [13 000 -15 000 ] | [11 000 -13 000 ] | [10 000 -12 000 ] | [9 000 -11 000 ] | [8 000 -10 000 ] |
| CET 1 | [9-10] | [10-11] | [11-12] | [11-12] (29) | [11-12] (29) | [12-13] (30) | [12-13] (30) |
| Capital ratio | [13-14] | [12-13] | [14-15] | [14-15] (29) | [15-16] (29) | [15-16] (30) | [14-15] (30) |
| Source: New restructuring plan of ÖVAG |

(55)

As illustrated in Table 2, in the base case ÖVAG is expected to continuously improve its results until 2016.

Table 2

Table 2

Key financial figures of ÖVAG – base case (in EUR million and %, respectively)

Key financial figures of ÖVAG – base case (in EUR million and %, respectively)

ÖVAG Group

2012P

2013P

2014P

2015P

2016P

2017P

2018P

Result (after tax)

[60-80]

[10-30]

– [30-10]

[40-60]

[130-150]

[90-110]

n.a.

Return on Equity after taxes

[3-5]

[1-3]

– [3-1]

[3-5]

[10-12]

[8-10]

n.a.

Balance sheet total

[20 000 -30 000 ]

[26 000 -28 000 ]

[22 000 -24 000 ]

[20 000 -22 000 ]

[19 000 -21 000 ]

[18 000 -20 000 ]

n.a.

RWA

[18 000 -20 000 ]

[16 000 -18 000 ]

[13 000 -15 000 ]

[11 000 -13 000 ]

[10 000 -12 000 ]

[9 000 -11 000 ]

[8 000 -10 000 ]

CET 1

[9-10]

[10-11]

[11-12]

[11-12] (29)

29

[11-12] (29)

29

[12-13] (30)

30

[12-13] (30)

30

Capital ratio

[13-14]

[12-13]

[14-15]

[14-15] (29)

29

[15-16] (29)

29

[15-16] (30)

30

[14-15] (30)

30

Source: New restructuring plan of ÖVAG

Source:

| (56) | The return on equity (RoE) of the bank increases over the restructuring period to a level of 8,0 % after-tax. The bank claims that the level of 8 % RoE after-tax represents a sufficient and market-oriented capital remuneration, given the business model of the core-bank with a low risk profile. In particular the bank is not involved in such volatile activities as investment banking or proprietary trading but concentrates on its role as central institute for the local co-operative banks. |
| --- | --- |

(56)

The return on equity (RoE) of the bank increases over the restructuring period to a level of 8,0 % after-tax. The bank claims that the level of 8 % RoE after-tax represents a sufficient and market-oriented capital remuneration, given the business model of the core-bank with a low risk profile. In particular the bank is not involved in such volatile activities as investment banking or proprietary trading but concentrates on its role as central institute for the local co-operative banks.

Stress case

Stress case

| (57) | ÖVAG provided a stress case scenario on a group level based on less favourable market assumptions. Among others, a further appreciation of the US dollar against the euro and the weakening of the Romanian leu against the euro, a slower increase of the interest rates than expected in the base case, a further deterioration of some sovereign ratings and a decline of the economic growth in the EURO area were assumed. According to the bank's estimations those developments in sum could lead to an additional use of capital of up to EUR [600-650] million and to a reduction of ÖVAG's CET 1 ratio for the overall risk to [6,0-7,0] % in 2017.

  Table 3


  Key financial figures of ÖVAG – stress case (in EUR million and %, respectively) | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| CET1 | [7-8] | [7-8] | [7-8] | [5,5-6,5] | [6-7] | [6-7] |
| Capital ratio | [11-12] | [10-11] | [10-11] | [8-9] | [9-10] | [8-9] |

(57)

ÖVAG provided a stress case scenario on a group level based on less favourable market assumptions. Among others, a further appreciation of the US dollar against the euro and the weakening of the Romanian leu against the euro, a slower increase of the interest rates than expected in the base case, a further deterioration of some sovereign ratings and a decline of the economic growth in the EURO area were assumed. According to the bank's estimations those developments in sum could lead to an additional use of capital of up to EUR [600-650] million and to a reduction of ÖVAG's CET 1 ratio for the overall risk to [6,0-7,0] % in 2017.

Table 3

Table 3

Key financial figures of ÖVAG – stress case (in EUR million and %, respectively)

Key financial figures of ÖVAG – stress case (in EUR million and %, respectively)

2012

2013

2014

2015

2016

2017

CET1

[7-8]

[7-8]

[7-8]

[5,5-6,5]

[6-7]

[6-7]

Capital ratio

[11-12]

[10-11]

[10-11]

[8-9]

[9-10]

[8-9]

Sensitivity scenarios

Sensitivity scenarios

| (58) | Furthermore, the bank provided sensitivity scenarios set up by an external consultant, in which the following additional adverse developments were assumed: delayed sale of VBRO at a [...] price of EUR [...] million, increase of its refinancing costs; inability to divest VBLI; lower quality of assets in the non-core segment (increase in RWA by 20 %, increase in risk-provisioning by 50 % and impairments on investments of EUR 100 million); increase in RWA by 10 % in the core segment; no increase in profits in 2016 and 2017. |
| --- | --- |

(58)

Furthermore, the bank provided sensitivity scenarios set up by an external consultant, in which the following additional adverse developments were assumed: delayed sale of VBRO at a [...] price of EUR [...] million, increase of its refinancing costs; inability to divest VBLI; lower quality of assets in the non-core segment (increase in RWA by 20 %, increase in risk-provisioning by 50 % and impairments on investments of EUR 100 million); increase in RWA by 10 % in the core segment; no increase in profits in 2016 and 2017.

| (59) | The consultant found that if all those stress conditions were jointly to materialise, ÖVAG would have a capital shortfall of EUR 195 million in 2017/2018, (31) which however would be covered by the regulatory excess capital of the co-operative banks (i.e. the "Haftungsverbund") amounting to EUR [650-750] million in 2017/2018. Thus, overall, that adverse scenario could be managed by the bank. |
| --- | --- |

(59)

The consultant found that if all those stress conditions were jointly to materialise, ÖVAG would have a capital shortfall of EUR 195 million in 2017/2018, (31) which however would be covered by the regulatory excess capital of the co-operative banks (i.e. the "Haftungsverbund") amounting to EUR [650-750] million in 2017/2018. Thus, overall, that adverse scenario could be managed by the bank.

31

Cost reductions

Cost reductions

| (60) | According to the financial projections of ÖVAG, its administrative costs will be reduced from EUR 166 million in 2012 to EUR 105,5 million in 2017, which represents a reduction by 36 %. However, in addition to the cost-optimisation measures (such as closing the Frankfurt branch and IK's representative offices in CEE; synergies resulting from the merger of ÖVAG and IK; reduction of personnel, building occupancy and consultancy expenses; outsourcing of IT infrastructure), that impact includes the effects of divestments and scaling-down of operations in the non-core segment. Therefore, the bank provided also information on the expected results of the cost-cutting measures in the core segment. There the cost optimisation measures should result in a reduction of the annual costs by EUR 15 million by the end of the restructuring period, which represents about 12 % of the total costs in 2012. |
| --- | --- |

(60)

According to the financial projections of ÖVAG, its administrative costs will be reduced from EUR 166 million in 2012 to EUR 105,5 million in 2017, which represents a reduction by 36 %. However, in addition to the cost-optimisation measures (such as closing the Frankfurt branch and IK's representative offices in CEE; synergies resulting from the merger of ÖVAG and IK; reduction of personnel, building occupancy and consultancy expenses; outsourcing of IT infrastructure), that impact includes the effects of divestments and scaling-down of operations in the non-core segment. Therefore, the bank provided also information on the expected results of the cost-cutting measures in the core segment. There the cost optimisation measures should result in a reduction of the annual costs by EUR 15 million by the end of the restructuring period, which represents about 12 % of the total costs in 2012.

Redemption of PS in 2017/2018

Redemption of PS in 2017/2018

| (61) | As part of the capital cut in 2012, the PS granted by Austria in 2009 was reduced to EUR 300 million. The bank intends to redeem 50 % of that amount in 2017 and the remaining 50 % at the beginning of 2018. If it proves necessary to do so to allow for that redemption, the Volksbanken will provide ÖVAG with the relevant means. |
| --- | --- |

(61)

As part of the capital cut in 2012, the PS granted by Austria in 2009 was reduced to EUR 300 million. The bank intends to redeem 50 % of that amount in 2017 and the remaining 50 % at the beginning of 2018. If it proves necessary to do so to allow for that redemption, the Volksbanken will provide ÖVAG with the relevant means.

3.   GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

| (62) | The Commission recalls that it opened the formal investigation procedure pursuant to Article 108(2) of the Treaty regarding the compatibility of the restructuring aid for ÖVAG with the internal market because it had, on the basis of the initial restructuring plan, serious doubts whether ÖVAG would be able to restore its long-term viability. (32) The Commission also expressed doubts whether adequate burden-sharing was ensured and the distortions of competition were sufficiently limited. (33) |
| --- | --- |

(62)

The Commission recalls that it opened the formal investigation procedure pursuant to Article 108(2) of the Treaty regarding the compatibility of the restructuring aid for ÖVAG with the internal market because it had, on the basis of the initial restructuring plan, serious doubts whether ÖVAG would be able to restore its long-term viability. (32) The Commission also expressed doubts whether adequate burden-sharing was ensured and the distortions of competition were sufficiently limited. (33)

32

33

4.   COMMENTS FROM AUSTRIA

COMMENTS FROM AUSTRIA

| (63) | Austria underlines that ÖVAG is a bank of systemic relevance whose insolvency would have had massive negative implications for the Austrian banking system and the Austrian real economy. That assessment has been confirmed by a letter of Österreichische Nationalbank, the Austrian central bank. |
| --- | --- |

(63)

Austria underlines that ÖVAG is a bank of systemic relevance whose insolvency would have had massive negative implications for the Austrian banking system and the Austrian real economy. That assessment has been confirmed by a letter of Österreichische Nationalbank, the Austrian central bank.

| (64) | Austria does not deny the aid character of the measures described in section 2.2. |
| --- | --- |

(64)

Austria does not deny the aid character of the measures described in section 2.2.

| (65) | Austria points out that the measures described in section 2.2.1 were granted in compliance with the approved Austrian bank support scheme. It maintains that ÖVAG was at the moment of the recapitalisation not a distressed bank in the meaning of the Recapitalisation Communication. Nevertheless, Austria has agreed to submitting a restructuring plan for the bank. |
| --- | --- |

(65)

Austria points out that the measures described in section 2.2.1 were granted in compliance with the approved Austrian bank support scheme. It maintains that ÖVAG was at the moment of the recapitalisation not a distressed bank in the meaning of the Recapitalisation Communication. Nevertheless, Austria has agreed to submitting a restructuring plan for the bank.

| (66) | Further, Austria does not contest that the second recapitalisation measure agreed on 27 February 2012 and the asset guarantee ("the 2012 measures") constitute State aid within the meaning of Article 107(1) of the Treaty. However, it considers them compatible with the internal market on the basis of Article 107(3)(b) of the Treaty, as they are required to remedy a serious disturbance in the economy of a Member State and are compliant with the relevant Commission communications. |
| --- | --- |

(66)

Further, Austria does not contest that the second recapitalisation measure agreed on 27 February 2012 and the asset guarantee ("the 2012 measures") constitute State aid within the meaning of Article 107(1) of the Treaty. However, it considers them compatible with the internal market on the basis of Article 107(3)(b) of the Treaty, as they are required to remedy a serious disturbance in the economy of a Member State and are compliant with the relevant Commission communications.

| (67) | In particular, Austria provided information and comparative market data on the basis of which it argues that the 2012 measures comply with the requirements of the Recapitalisation Communication and the Communication from the Commission on the application, from 1 January 2012, of State aid rules to support measures in favour of banks in the context of the financial crisis (34) ("2011 Prolongation Communication"). |
| --- | --- |

(67)

In particular, Austria provided information and comparative market data on the basis of which it argues that the 2012 measures comply with the requirements of the Recapitalisation Communication and the Communication from the Commission on the application, from 1 January 2012, of State aid rules to support measures in favour of banks in the context of the financial crisis (34) ("2011 Prolongation Communication").

34

| (68) | As regards the 2012 recapitalisation measure, the company value of ÖVAG (a non-listed bank) prior to the 2012 recapitalisation was estimated on the basis of an appropriate market-based valuation approach, which was a peer group price-to-book (P/B) approach. On the basis of the observable market data for an appropriate peer group, (35) Austria determined a P/B-multiple, leading to a company value in the range of EUR [270-300] million to EUR [320-360] million. After the recapitalisation by the Volksbanken is taken into account, the company value would range from EUR [500-530] million to EUR [550-580] million and translate to a price per share of EUR [3-4]. Since Austria subscribed the shares at the price of EUR 2,2, the effective discount ranges from [35 % to 45 %]. Austria considers that the application of that discount adequately addresses the requirements stipulated in the point 8 of the 2011 Prolongation Communication that State capital injections should be subscribed at a sufficient dilution-adjusted discount. |
| --- | --- |

(68)

As regards the 2012 recapitalisation measure, the company value of ÖVAG (a non-listed bank) prior to the 2012 recapitalisation was estimated on the basis of an appropriate market-based valuation approach, which was a peer group price-to-book (P/B) approach. On the basis of the observable market data for an appropriate peer group, (35) Austria determined a P/B-multiple, leading to a company value in the range of EUR [270-300] million to EUR [320-360] million. After the recapitalisation by the Volksbanken is taken into account, the company value would range from EUR [500-530] million to EUR [550-580] million and translate to a price per share of EUR [3-4]. Since Austria subscribed the shares at the price of EUR 2,2, the effective discount ranges from [35 % to 45 %]. Austria considers that the application of that discount adequately addresses the requirements stipulated in the point 8 of the 2011 Prolongation Communication that State capital injections should be subscribed at a sufficient dilution-adjusted discount.

35

| (69) | As regards the asset guarantee, Austria argues that it is a measure which aims solely at increasing ÖVAG's capital by EUR 100 million. Since it is comparable to recapitalisation and remunerated at 10 % p. a., it is compliant with the Recapitalisation Communication. |
| --- | --- |

(69)

As regards the asset guarantee, Austria argues that it is a measure which aims solely at increasing ÖVAG's capital by EUR 100 million. Since it is comparable to recapitalisation and remunerated at 10 % p. a., it is compliant with the Recapitalisation Communication.

| (70) | Austria is of the opinion that the restructuring plan ensures that ÖVAG's long-term viability is restored, that ÖVAG provides a sufficient own contribution to the restructuring costs and that distortions of competition are limited by substantial structural and behavioural measures. |
| --- | --- |

(70)

Austria is of the opinion that the restructuring plan ensures that ÖVAG's long-term viability is restored, that ÖVAG provides a sufficient own contribution to the restructuring costs and that distortions of competition are limited by substantial structural and behavioural measures.

| (71) | Austria has provided a number of commitments that are set out in the Annex and constitute an integral part of this Decision. In order to ensure that the commitments will be implemented, a monitoring trustee will be appointed. The activities of the monitoring trustee will apply throughout the restructuring period, which lasts until 2017. The commitments comprise several behavioural restrictions for ÖVAG such as dividend and coupon bans, (36) a ban on advertising the state aid received and a price leadership ban for its online platform "Livebank", (37) an acquisition ban (38) and a commitment to assess the remuneration of board members with the aim of creating an incentive structure for a sustainable development. (39) In addition, the commitments comprise the obligation to divest VBLI by [2013-2017], VBRO and the banking activities in Malta by [2013-2017] and the participation in RZB by [2013-2017]. (40) |
| --- | --- |

(71)

Austria has provided a number of commitments that are set out in the Annex and constitute an integral part of this Decision. In order to ensure that the commitments will be implemented, a monitoring trustee will be appointed. The activities of the monitoring trustee will apply throughout the restructuring period, which lasts until 2017. The commitments comprise several behavioural restrictions for ÖVAG such as dividend and coupon bans, (36) a ban on advertising the state aid received and a price leadership ban for its online platform "Livebank", (37) an acquisition ban (38) and a commitment to assess the remuneration of board members with the aim of creating an incentive structure for a sustainable development. (39) In addition, the commitments comprise the obligation to divest VBLI by [2013-2017], VBRO and the banking activities in Malta by [2013-2017] and the participation in RZB by [2013-2017]. (40)

36

37

38

39

40

5.   ASSESSMENT

ASSESSMENT

5.1.   Existence and the amount of aid

Existence and the amount of aid

| (72) | As stated in Article 107(1) of the Treaty 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 shall, in so far as it affects trade between Member States, be incompatible with the internal market. |
| --- | --- |

(72)

As stated in Article 107(1) of the Treaty 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 shall, in so far as it affects trade between Member States, be incompatible with the internal market.

| (73) | The qualification of a measure as State aid requires that the following conditions are met: it must be financed by a Member State or through State resources; it must grant an advantage liable to favour certain undertakings or the production of certain goods; the measure must distort or threaten to distort competition; and the measure must have the potential to affect trade between Member States. |
| --- | --- |

(73)

The qualification of a measure as State aid requires that the following conditions are met: it must be financed by a Member State or through State resources; it must grant an advantage liable to favour certain undertakings or the production of certain goods; the measure must distort or threaten to distort competition; and the measure must have the potential to affect trade between Member States.

| (74) | The Commission recalls that it has already established in the decisions on the Austrian bank support scheme that liquidity guarantees and capital injections given under the scheme in 2009 constitute aid. That qualification is not disputed by Austria. |
| --- | --- |

(74)

The Commission recalls that it has already established in the decisions on the Austrian bank support scheme that liquidity guarantees and capital injections given under the scheme in 2009 constitute aid. That qualification is not disputed by Austria.

| (75) | Further, as regards the support measures agreed on 27 February 2012, the Commission considers the conditions recalled in recital 73 are also met for the recapitalisation of EUR 250 million and the asset guarantee of EUR 100 million. |
| --- | --- |

(75)

Further, as regards the support measures agreed on 27 February 2012, the Commission considers the conditions recalled in recital 73 are also met for the recapitalisation of EUR 250 million and the asset guarantee of EUR 100 million.

| (76) | The 2012 measures are granted by Austria and thus are directly attributable to the State. The Commission thus concludes that they stem from State resources. |
| --- | --- |

(76)

The 2012 measures are granted by Austria and thus are directly attributable to the State. The Commission thus concludes that they stem from State resources.

| (77) | The 2012 measures allow ÖVAG to obtain capital (and indeed the asset guarantee de-facto provides the bank with capital) in a financial and economic crisis situation where it would not have been able to find that capital at the same conditions on the market. The Commission notes that the minority shareholders of ÖVAG (ERGO Group, RZB and DZ Bank) decided not to participate in the recapitalisation of ÖVAG. The Volksbanken participated in the capital increase. However, as existing majority shareholders and given that they are commercially closely linked to ÖVAG, they were investing under different economic considerations than those of the State. Indeed, an insolvency of ÖVAG would have had severe consequences for the Volksbanken, potentially challenging their own survival. In this context they participated in the rescue of ÖVAG in order to secure their own commercial future. The 2012 measures must therefore be regarded as providing an advantage to ÖVAG. Moreover, that advantage is selective since it only benefits one bank. |
| --- | --- |

(77)

The 2012 measures allow ÖVAG to obtain capital (and indeed the asset guarantee de-facto provides the bank with capital) in a financial and economic crisis situation where it would not have been able to find that capital at the same conditions on the market. The Commission notes that the minority shareholders of ÖVAG (ERGO Group, RZB and DZ Bank) decided not to participate in the recapitalisation of ÖVAG. The Volksbanken participated in the capital increase. However, as existing majority shareholders and given that they are commercially closely linked to ÖVAG, they were investing under different economic considerations than those of the State. Indeed, an insolvency of ÖVAG would have had severe consequences for the Volksbanken, potentially challenging their own survival. In this context they participated in the rescue of ÖVAG in order to secure their own commercial future. The 2012 measures must therefore be regarded as providing an advantage to ÖVAG. Moreover, that advantage is selective since it only benefits one bank.

| (78) | Given that ÖVAG is active in the financial sector, which is open to intense international competition, any advantage from State resources to the bank has the potential to affect intra-Union trade and to distort competition. The measures therefore constitute State aid within the meaning of Article 107(1) of the Treaty. That assessment is also not disputed by Austria. |
| --- | --- |

(78)

Given that ÖVAG is active in the financial sector, which is open to intense international competition, any advantage from State resources to the bank has the potential to affect intra-Union trade and to distort competition. The measures therefore constitute State aid within the meaning of Article 107(1) of the Treaty. That assessment is also not disputed by Austria.

| (79) | The 2009 and 2012 capital measures total EUR 1,350 million and represent 3,8 % of the bank’s RWA at the end of 2008 (EUR 35,2 billion). In addition, EUR 3,0 billion of guarantees were obtained by the bank from Austria. |
| --- | --- |

(79)

The 2009 and 2012 capital measures total EUR 1,350 million and represent 3,8 % of the bank’s RWA at the end of 2008 (EUR 35,2 billion). In addition, EUR 3,0 billion of guarantees were obtained by the bank from Austria.

5.2.   Legal basis of compatibility assessment

Legal basis of compatibility assessment

| (80) | On the basis of Article 107(3)(b) of the Treaty State aid can be found compatible with the internal market if it is intended "to remedy a serious disturbance in the economy of a Member State". The Commission has acknowledged that the global financial crisis can create a serious disturbance in the economy of a Member State and that measures supporting banks are apt to remedy that disturbance. That assessment has been confirmed in the Recapitalisation Communication and the Commission Communication - Recapitalisation of financial institutions in the current financial crisis: limitation of the aid to the minimum necessary and safeguards against undue distortions of competition (41) ("Restructuring Communication"). The Commission still considers that the requirements for State aid to be approved pursuant to Article 107(3)(b) of the Treaty are fulfilled in view of the reappearance of stress in the financial markets. The Commission confirmed that view in December 2011 by adopting the 2011 Prolongation Communication that prolongs the application of State aid rules to support measures in favour of banks in the context of the financial crisis. |
| --- | --- |

(80)

On the basis of Article 107(3)(b) of the Treaty State aid can be found compatible with the internal market if it is intended "to remedy a serious disturbance in the economy of a Member State". The Commission has acknowledged that the global financial crisis can create a serious disturbance in the economy of a Member State and that measures supporting banks are apt to remedy that disturbance. That assessment has been confirmed in the Recapitalisation Communication and the Commission Communication - Recapitalisation of financial institutions in the current financial crisis: limitation of the aid to the minimum necessary and safeguards against undue distortions of competition (41) ("Restructuring Communication"). The Commission still considers that the requirements for State aid to be approved pursuant to Article 107(3)(b) of the Treaty are fulfilled in view of the reappearance of stress in the financial markets. The Commission confirmed that view in December 2011 by adopting the 2011 Prolongation Communication that prolongs the application of State aid rules to support measures in favour of banks in the context of the financial crisis.

41

| (81) | In respect to the Austrian economy, the Commission acknowledged in its approval of the Austrian scheme (42) and in the approval of State aid measures granted by Austria to individual banks (43) that there is a threat of serious disturbance in the Austrian economy and that State support of banks is suitable to remedy that disturbance. Therefore, the legal basis for the assessment of the aid measures should be Article 107(3)(b) of the Treaty. (44) |
| --- | --- |

(81)

In respect to the Austrian economy, the Commission acknowledged in its approval of the Austrian scheme (42) and in the approval of State aid measures granted by Austria to individual banks (43) that there is a threat of serious disturbance in the Austrian economy and that State support of banks is suitable to remedy that disturbance. Therefore, the legal basis for the assessment of the aid measures should be Article 107(3)(b) of the Treaty. (44)

42

43

44

| (82) | The compatibility of the recapitalisation measures, in particular as regards their remuneration, should first be assessed on the basis of the Recapitalisation Communication and the 2011 Prolongation Communication. |
| --- | --- |

(82)

The compatibility of the recapitalisation measures, in particular as regards their remuneration, should first be assessed on the basis of the Recapitalisation Communication and the 2011 Prolongation Communication.

5.3.   Compliance with the Recapitalisation Communication and the 2011 Prolongation Communication

Compliance with the Recapitalisation Communication and the 2011 Prolongation Communication

| (83) | As regards the PS granted in 2009, it can be noted that it was granted in line with the terms laid down in the approved Austrian bank support scheme for such kind of instruments. The Commission notes in addition that the same holds true for the refinancing guarantees granted at that time. (45) |
| --- | --- |

(83)

As regards the PS granted in 2009, it can be noted that it was granted in line with the terms laid down in the approved Austrian bank support scheme for such kind of instruments. The Commission notes in addition that the same holds true for the refinancing guarantees granted at that time. (45)

45

| (84) | As regards the capital injection in 2012, according to the Annex of the Recapitalisation Communication and to the 2011 Prolongation Communication, capital increases for non-listed banks (such as ÖVAG) should, where there is no observable market price, be valued on the basis of an appropriate market-based valuation approach (including a peer group price-to-earnings (P/E) approach or other generally accepted valuation methodologies). |
| --- | --- |

(84)

As regards the capital injection in 2012, according to the Annex of the Recapitalisation Communication and to the 2011 Prolongation Communication, capital increases for non-listed banks (such as ÖVAG) should, where there is no observable market price, be valued on the basis of an appropriate market-based valuation approach (including a peer group price-to-earnings (P/E) approach or other generally accepted valuation methodologies).

| (85) | The Commission notes that Austria provided calculations based on a price-to-book approach to determine the value of ÖVAG prior to the 2012 recapitalisation. The 2011 Prolongation Communication explicitly mentions only the price-to-earnings approach but it also refers to other generally accepted valuation methodologies. The Commission considers the choice of a price-to-book approach to be justified in the case at hand. First, the price-to-book approach is also an established market-based valuation method. Second, given the past volatility of ÖVAG's results, establishing the bank's value based on a more stable basis seems a correct approach. |
| --- | --- |

(85)

The Commission notes that Austria provided calculations based on a price-to-book approach to determine the value of ÖVAG prior to the 2012 recapitalisation. The 2011 Prolongation Communication explicitly mentions only the price-to-earnings approach but it also refers to other generally accepted valuation methodologies. The Commission considers the choice of a price-to-book approach to be justified in the case at hand. First, the price-to-book approach is also an established market-based valuation method. Second, given the past volatility of ÖVAG's results, establishing the bank's value based on a more stable basis seems a correct approach.

| (86) | The Commission has critically reviewed the peer group selected by Austria and the established range of applicable P/B multiple and considers them reasonable. |
| --- | --- |

(86)

The Commission has critically reviewed the peer group selected by Austria and the established range of applicable P/B multiple and considers them reasonable.

| (87) | Further, the Commission then analysed whether shareholders of ÖVAG acquired an appropriate share in the bank in the course of the recapitalisation, assuming the lower-range end of the company values (EUR [270-300] million). The Commission considered that if it can be concluded that the State, who contributed to the recapitalisation of the bank, obtained an appropriate share in the bank even when the lowest company value is assumed, it can be concluded that the measures fulfil the Commission’s requirements even if the company value is in fact higher than the lowest in the range. Before making that assessment it also needs to be considered that the new capital provider would receive a sufficient discount. |
| --- | --- |

(87)

Further, the Commission then analysed whether shareholders of ÖVAG acquired an appropriate share in the bank in the course of the recapitalisation, assuming the lower-range end of the company values (EUR [270-300] million). The Commission considered that if it can be concluded that the State, who contributed to the recapitalisation of the bank, obtained an appropriate share in the bank even when the lowest company value is assumed, it can be concluded that the measures fulfil the Commission’s requirements even if the company value is in fact higher than the lowest in the range. Before making that assessment it also needs to be considered that the new capital provider would receive a sufficient discount.

| (88) | In fact, according to points 8 and 9 of the 2011 Prolongation Communication capital injections should be subscribed at a sufficient discount to the share price after adjustment for the dilution effect which can be quantified by using generally accepted market techniques (TERP (46)). That approach is applied to the 2012 recapitalisation measure. |
| --- | --- |

(88)

In fact, according to points 8 and 9 of the 2011 Prolongation Communication capital injections should be subscribed at a sufficient discount to the share price after adjustment for the dilution effect which can be quantified by using generally accepted market techniques (TERP (46)). That approach is applied to the 2012 recapitalisation measure.

46

| (89) | The Commission has accepted a discount of at least 25 % as acceptable in its recent decisional practice. (47) That level needs to be adjusted taking into account the size of the capital-strengthening measures in relation to the existing capital of the bank. The Commission notes in that respect that the State subscribed the capital with a discount of [35 % to 45 %]. (48) |
| --- | --- |

(89)

The Commission has accepted a discount of at least 25 % as acceptable in its recent decisional practice. (47) That level needs to be adjusted taking into account the size of the capital-strengthening measures in relation to the existing capital of the bank. The Commission notes in that respect that the State subscribed the capital with a discount of [35 % to 45 %]. (48)

47

48

| (90) | On the basis of the range of the company evaluation, the Commission has calculated the theoretical shareholder structure of ÖVAG after the 2012 recapitalisation measure and compared it to the shareholder structure of the bank de facto agreed upon as a result of that measure. The Commission observes that the new shareholder structure of ÖVAG (49) as agreed upon by its shareholders gives the State, which contributed most to the recapitalisation of the bank, a slightly higher stake than determined by the Commission as being necessary for compliance with State aid rules. On that basis, the Commission concludes that the 2012 recapitalisation of ÖVAG is in line with the Recapitalisation Communication and the 2011 Prolongation Communication. |
| --- | --- |

(90)

On the basis of the range of the company evaluation, the Commission has calculated the theoretical shareholder structure of ÖVAG after the 2012 recapitalisation measure and compared it to the shareholder structure of the bank de facto agreed upon as a result of that measure. The Commission observes that the new shareholder structure of ÖVAG (49) as agreed upon by its shareholders gives the State, which contributed most to the recapitalisation of the bank, a slightly higher stake than determined by the Commission as being necessary for compliance with State aid rules. On that basis, the Commission concludes that the 2012 recapitalisation of ÖVAG is in line with the Recapitalisation Communication and the 2011 Prolongation Communication.

49

| (91) | As regards the compatibility of the asset guarantee, the Commission notes that the measure serves the purpose of allowing ÖVAG to reverse its already built loan loss provisions. In fact, the measure allows the capital base to be increased. However, unlike a typical impaired asset measure, it does not have an effect on the RWA of the bank due to the structure of the guarantee which aims at reducing only the loan loss provisions of the bank. In addition, the asset guarantee covers the first loss and is thus also different from a standard impaired asset measure. Moreover, any amount drawn must be repaid to the State. On that basis, as the guarantee is constructed, the effect of the measure is to temporarily increase and protect the capital base of ÖVAG and is therefore similar to a capital injection into ÖVAG and needs to be assessed as such. For all those reasons, the Commission finds that the measure resembles a capital injection. |
| --- | --- |

(91)

As regards the compatibility of the asset guarantee, the Commission notes that the measure serves the purpose of allowing ÖVAG to reverse its already built loan loss provisions. In fact, the measure allows the capital base to be increased. However, unlike a typical impaired asset measure, it does not have an effect on the RWA of the bank due to the structure of the guarantee which aims at reducing only the loan loss provisions of the bank. In addition, the asset guarantee covers the first loss and is thus also different from a standard impaired asset measure. Moreover, any amount drawn must be repaid to the State. On that basis, as the guarantee is constructed, the effect of the measure is to temporarily increase and protect the capital base of ÖVAG and is therefore similar to a capital injection into ÖVAG and needs to be assessed as such. For all those reasons, the Commission finds that the measure resembles a capital injection.

| (92) | ÖVAG has received an asset guarantee amounting to EUR 100 million which will be remunerated with a fee of 10 % p.a. on the total amount granted and not called (minus cancellations) from 30 September 2012 until 1 January 2016. For the amounts called upon, that remuneration will be replaced by a fee of 10 % p.a. which will be paid from the moment the amounts are called upon until the amount called upon is fully repaid to the State. The latter remuneration is linked to the bank making profits and complying with a CET1 ratio of 10 % and is not cumulative. The Commission notes that both the remuneration structure and level are similar to the remuneration typically required for a capital injection for a distressed bank under the Recapitalisation Communication. The level of remuneration is also in line with point 29 of the Austrian scheme on emergency aid measures to distressed banks. (50) |
| --- | --- |

(92)

ÖVAG has received an asset guarantee amounting to EUR 100 million which will be remunerated with a fee of 10 % p.a. on the total amount granted and not called (minus cancellations) from 30 September 2012 until 1 January 2016. For the amounts called upon, that remuneration will be replaced by a fee of 10 % p.a. which will be paid from the moment the amounts are called upon until the amount called upon is fully repaid to the State. The latter remuneration is linked to the bank making profits and complying with a CET1 ratio of 10 % and is not cumulative. The Commission notes that both the remuneration structure and level are similar to the remuneration typically required for a capital injection for a distressed bank under the Recapitalisation Communication. The level of remuneration is also in line with point 29 of the Austrian scheme on emergency aid measures to distressed banks. (50)

50

5.4.   Compliance with Restructuring Communication

Compliance with Restructuring Communication

| (93) | All the measures identified as State aid have been provided in the context of the restructuring of ÖVAG. The Restructuring Communication sets out the rules applicable to the granting of restructuring aid of financial institutions in the current crisis. 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 has to lead to the restoration of the viability of the bank, include sufficient own contribution and burden-sharing and contain sufficient measures limiting distortions of competition. |
| --- | --- |

(93)

All the measures identified as State aid have been provided in the context of the restructuring of ÖVAG. The Restructuring Communication sets out the rules applicable to the granting of restructuring aid of financial institutions in the current crisis. 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 has to lead to the restoration of the viability of the bank, include sufficient own contribution and burden-sharing and contain sufficient measures limiting distortions of competition.

5.4.1.   Viability

Viability

| (94) | A restructuring plan must ensure that the financial institution is able to restore, when properly implementing it, its long-term viability (section 2 of the Restructuring Communication). |
| --- | --- |

(94)

A restructuring plan must ensure that the financial institution is able to restore, when properly implementing it, its long-term viability (section 2 of the Restructuring Communication).

| (95) | According to the Restructuring Communication, 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. It must be able to cover all its costs and provide an appropriate return on equity taking into account its risk profile. The restructuring plan must identify the causes of the bank's difficulties and its weaknesses and explain how the restructuring is addressing them. In particular, successful restructuring entails withdrawal from all activities which would remain structurally loss-making in the medium-term. |
| --- | --- |

(95)

According to the Restructuring Communication, 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. It must be able to cover all its costs and provide an appropriate return on equity taking into account its risk profile. The restructuring plan must identify the causes of the bank's difficulties and its weaknesses and explain how the restructuring is addressing them. In particular, successful restructuring entails withdrawal from all activities which would remain structurally loss-making in the medium-term.

| (96) | In line with points 9 to 11 of the Restructuring Communication, Austria submitted a comprehensive and detailed restructuring plan which provides complete information on the business model. The plan also identifies the causes of the difficulties faced by the bank. |
| --- | --- |

(96)

In line with points 9 to 11 of the Restructuring Communication, Austria submitted a comprehensive and detailed restructuring plan which provides complete information on the business model. The plan also identifies the causes of the difficulties faced by the bank.

| (97) | As regards its business model, ÖVAG will limit its scope of activity to its role as central institute of the local and regional Volksbanken. It will provide liquidity management services and intermediation in the access to capital markets to the associated Volksbanken, products which exceed the Volksbanken's capacity or expertise, and shared back-office facilities such as compliance, marketing or IT. As a consequence, ÖVAG will concentrate on its statutory activities and capitalise on its core competences, while withdrawing from those areas which have been at the origin of its financial difficulties or do not fall within the scope of the newly defined business model. In particular, ÖVAG ceases its real estate activities and the parts of its corporate financing and investment portfolios which are not necessary for its role as central institute, and divests all non-core subsidiaries. The Commission considers that the new business model of the bank is appropriate to ensure its long-term viability and sustainability. |
| --- | --- |

(97)

As regards its business model, ÖVAG will limit its scope of activity to its role as central institute of the local and regional Volksbanken. It will provide liquidity management services and intermediation in the access to capital markets to the associated Volksbanken, products which exceed the Volksbanken's capacity or expertise, and shared back-office facilities such as compliance, marketing or IT. As a consequence, ÖVAG will concentrate on its statutory activities and capitalise on its core competences, while withdrawing from those areas which have been at the origin of its financial difficulties or do not fall within the scope of the newly defined business model. In particular, ÖVAG ceases its real estate activities and the parts of its corporate financing and investment portfolios which are not necessary for its role as central institute, and divests all non-core subsidiaries. The Commission considers that the new business model of the bank is appropriate to ensure its long-term viability and sustainability.

| (98) | ÖVAG's difficulties were mainly attributable to the following factors: its exposure to CEE countries through its retail banking subsidiaries grouped in VBI; its engagement in public finance and infrastructure financing; its real estate activities and parts of its corporate portfolio; its investment portfolio; its reliance on wholesale funding. |
| --- | --- |

(98)

ÖVAG's difficulties were mainly attributable to the following factors: its exposure to CEE countries through its retail banking subsidiaries grouped in VBI; its engagement in public finance and infrastructure financing; its real estate activities and parts of its corporate portfolio; its investment portfolio; its reliance on wholesale funding.

| (99) | The Commission notes positively that ÖVAG already sold all but one (VBRO) of its VBI subsidiaries in 2011. The Commission recalls that in light of the unsuccessful attempt to divest VBRO and the amount of losses it generated in 2011, the Commission expressed doubts in the opening Decision as to whether the initial restructuring plan would allow the bank to solve its problems. The Commission notes that the new restructuring plan identifies the sources of VBRO’s problems and addresses them by restructuring VBRO in such a way that the subsidiary does not negatively affect ÖVAG’s profitability in the future and that its attractiveness for a potential investor is increased. (51) It notes in this respect that according to the restructuring plan, VBRO is planning positive results in the coming years. Further, ÖVAG has written down the value of VBRO in its accounts to [0-50], in order to facilitate the sales process. Thus the bank no longer faces possible losses if a high sales price for VBRO cannot be achieved. ÖVAG and Austria have provided a commitment that if VBRO has not been sold by the end of [2013-2017], no new business will be undertaken and it will be liquidated in compliance with the relevant legal framework. (Alternatively, parts of VBRO could be sold by 31 December [2013-2017] and only the remaining portfolios be liquidated in compliance with the relevant legal framework.) On that basis, the Commission is reassured that the risks stemming from VBRO are already reduced and will be dealt with within a foreseeable time-frame. In that context, the Commission notes that VBRO has reduced the number of branches and employees as well as its lending business. |
| --- | --- |

(99)

The Commission notes positively that ÖVAG already sold all but one (VBRO) of its VBI subsidiaries in 2011. The Commission recalls that in light of the unsuccessful attempt to divest VBRO and the amount of losses it generated in 2011, the Commission expressed doubts in the opening Decision as to whether the initial restructuring plan would allow the bank to solve its problems. The Commission notes that the new restructuring plan identifies the sources of VBRO’s problems and addresses them by restructuring VBRO in such a way that the subsidiary does not negatively affect ÖVAG’s profitability in the future and that its attractiveness for a potential investor is increased. (51) It notes in this respect that according to the restructuring plan, VBRO is planning positive results in the coming years. Further, ÖVAG has written down the value of VBRO in its accounts to [0-50], in order to facilitate the sales process. Thus the bank no longer faces possible losses if a high sales price for VBRO cannot be achieved. ÖVAG and Austria have provided a commitment that if VBRO has not been sold by the end of [2013-2017], no new business will be undertaken and it will be liquidated in compliance with the relevant legal framework. (Alternatively, parts of VBRO could be sold by 31 December [2013-2017] and only the remaining portfolios be liquidated in compliance with the relevant legal framework.) On that basis, the Commission is reassured that the risks stemming from VBRO are already reduced and will be dealt with within a foreseeable time-frame. In that context, the Commission notes that VBRO has reduced the number of branches and employees as well as its lending business.

51

| (100) | As regards ÖVAG’s activities in the fields of real estate and of public finance and infrastructure financing, the Commission notes that the relevant subsidiaries (KA, Europolis) have been sold and losses on those stakes were recognised by ÖVAG in its accounts. The real estate activities remaining in ÖVAG have been allocated to the non-core portfolio and are being run down. |
| --- | --- |

(100)

As regards ÖVAG’s activities in the fields of real estate and of public finance and infrastructure financing, the Commission notes that the relevant subsidiaries (KA, Europolis) have been sold and losses on those stakes were recognised by ÖVAG in its accounts. The real estate activities remaining in ÖVAG have been allocated to the non-core portfolio and are being run down.

| (101) | The full cessation of the activities referred to in recitals 99 and 100 constitutes a necessary and appropriate measure to remove the Commission’s concerns, because the divestments set an end to any future losses or risk exposure resulting from those subsidiaries. In addition, the measures free up management capacities, which can be reemployed in the core business of the bank. |
| --- | --- |

(101)

The full cessation of the activities referred to in recitals 99 and 100 constitutes a necessary and appropriate measure to remove the Commission’s concerns, because the divestments set an end to any future losses or risk exposure resulting from those subsidiaries. In addition, the measures free up management capacities, which can be reemployed in the core business of the bank.

| (102) | As regards the parts of the corporate financing and investment portfolios which proved to be sources of losses in the past, the Commission notes that the bank has recognised the necessary losses in its accounts. Further, the CDS (52) exposures have been settled or hedged. Finally, those operations which are not necessary for ÖVAG to perform its role as central institute have been allocated to the non-core portfolio and are being run down. |
| --- | --- |

(102)

As regards the parts of the corporate financing and investment portfolios which proved to be sources of losses in the past, the Commission notes that the bank has recognised the necessary losses in its accounts. Further, the CDS (52) exposures have been settled or hedged. Finally, those operations which are not necessary for ÖVAG to perform its role as central institute have been allocated to the non-core portfolio and are being run down.

52

| (103) | As regards the past reliance on unsecured wholesale funding, the Commission notes that ÖVAG and its majority owners are implementing measures which will ensure a comfortable liquidity position of the bank. In particular, the establishment of the liquidity pool with the regional Volksbanken and the divestments of subsidiaries which depended heavily on the refinancing of ÖVAG should ease the funding needs of the bank by EUR 6,2 billion. Furthermore, with the acquisition of Livebank ÖVAG gained access to retail funding of currently EUR 470 million, significantly reducing its past reliance on wholesale funding. On the basis of the information provided in the context of the new restructuring plan, the Commission considers that ÖVAG is able to ensure a comfortable funding position, even with the approaching maturity of the remaining EUR 1 billion of State-guaranteed debt. |
| --- | --- |

(103)

As regards the past reliance on unsecured wholesale funding, the Commission notes that ÖVAG and its majority owners are implementing measures which will ensure a comfortable liquidity position of the bank. In particular, the establishment of the liquidity pool with the regional Volksbanken and the divestments of subsidiaries which depended heavily on the refinancing of ÖVAG should ease the funding needs of the bank by EUR 6,2 billion. Furthermore, with the acquisition of Livebank ÖVAG gained access to retail funding of currently EUR 470 million, significantly reducing its past reliance on wholesale funding. On the basis of the information provided in the context of the new restructuring plan, the Commission considers that ÖVAG is able to ensure a comfortable funding position, even with the approaching maturity of the remaining EUR 1 billion of State-guaranteed debt.

| (104) | According to point 13 of the Restructuring Communication, the bank must be able to generate an appropriate return on equity, while covering all costs of its normal operations and complying with the relevant regulatory requirements. The Commission considers that condition to be fulfilled, as explained in recitals 105-107. |
| --- | --- |

(104)

According to point 13 of the Restructuring Communication, the bank must be able to generate an appropriate return on equity, while covering all costs of its normal operations and complying with the relevant regulatory requirements. The Commission considers that condition to be fulfilled, as explained in recitals 105-107.

| (105) | First, ÖVAG provided financial projections for the period 2012-2017, giving information on revenues, costs, risk provisions, profits and capital position of the bank. The Commission finds that the base case projections provided are based on reasonable underlying macroeconomic assumptions. With the exception of the year 2014, (53) the bank expects to generate profits and continuously improve its yearly results over the restructuring period. Further, in 2017 the RoE will reach a level of 8,0 %, which appears to be an adequate level of remuneration for a bank with a risk profile such as that of ÖVAG. The bank's capital ratios remain above the minimum regulatory requirements over the whole restructuring period, with the CET1 ratio improving from [9-10] % in 2012 to [12-13] % (54) in 2017. |
| --- | --- |

(105)

First, ÖVAG provided financial projections for the period 2012-2017, giving information on revenues, costs, risk provisions, profits and capital position of the bank. The Commission finds that the base case projections provided are based on reasonable underlying macroeconomic assumptions. With the exception of the year 2014, (53) the bank expects to generate profits and continuously improve its yearly results over the restructuring period. Further, in 2017 the RoE will reach a level of 8,0 %, which appears to be an adequate level of remuneration for a bank with a risk profile such as that of ÖVAG. The bank's capital ratios remain above the minimum regulatory requirements over the whole restructuring period, with the CET1 ratio improving from [9-10] % in 2012 to [12-13] % (54) in 2017.

53

54

| (106) | Second, the new restructuring plan shows that ÖVAG is able to withstand a stress scenario. The assumptions of the stress scenario have been assessed as reasonable. As the stress scenario demonstrates that ÖVAG will exceed its regulatory capital requirements, the bank can be regarded as meeting the requirements of point 13 of the Restructuring Communication. |
| --- | --- |

(106)

Second, the new restructuring plan shows that ÖVAG is able to withstand a stress scenario. The assumptions of the stress scenario have been assessed as reasonable. As the stress scenario demonstrates that ÖVAG will exceed its regulatory capital requirements, the bank can be regarded as meeting the requirements of point 13 of the Restructuring Communication.

| (107) | Finally, ÖVAG will run down the non-core segment internally, without a legal separation. In that context, the Commission notes that ÖVAG has commissioned simulations in order to quantify a possible maximum impact of the risks from the non-core segment on its capital position. The sensitivity analysis provided by the expert (55) demonstrates ÖVAG's ability to sustain adverse developments in its non-core portfolio, so that the run-down of the balance sheet of ÖVAG should not undermine the long-term viability of the bank. |
| --- | --- |

(107)

Finally, ÖVAG will run down the non-core segment internally, without a legal separation. In that context, the Commission notes that ÖVAG has commissioned simulations in order to quantify a possible maximum impact of the risks from the non-core segment on its capital position. The sensitivity analysis provided by the expert (55) demonstrates ÖVAG's ability to sustain adverse developments in its non-core portfolio, so that the run-down of the balance sheet of ÖVAG should not undermine the long-term viability of the bank.

55

| (108) | ÖVAG also presented a strategy for partial exit of the State capital, which comprises the expiry of the asset guarantee in 2015 and redemption of EUR 150 million State PS in 2017 and of the remaining tranche of EUR 150 million immediately after 31 December 2017. To that end, ÖVAG will retain its profits over the restructuring period in order to build up its capital position. This building-up of capital should allow the bank to cope with the termination of the asset guarantee in 2015 and to redeem the State PS in line with the agreed timeline with its own capital means, while complying with the regulatory capital requirements. The Commission notes that in the context of financial projections in the base case, the bank provided information about its capital position until 2018, (56) demonstrating that the implementation of the exit strategy leads to CET1 and equity ratios of [12-13] % and [14-15] % respectively. The Commission welcomes the commitment of the associated Volksbanken to support ÖVAG in the completion of the exit strategy for the State PS. (57) According to the sensitivity analysis provided by the bank, if the adverse development in ÖVAG’s non-core segment were to materialise, the associated Volksbanken would have sufficient own funds to allow ÖVAG to redeem the State PS while still complying with the regulatory requirements. The Commission considers that the exit strategy together with the adequate RoE achieved by the end of the restructuring period ensure that the State aid received by ÖVAG is terminated by means of repayment, expiry or remuneration on market terms. |
| --- | --- |

(108)

ÖVAG also presented a strategy for partial exit of the State capital, which comprises the expiry of the asset guarantee in 2015 and redemption of EUR 150 million State PS in 2017 and of the remaining tranche of EUR 150 million immediately after 31 December 2017. To that end, ÖVAG will retain its profits over the restructuring period in order to build up its capital position. This building-up of capital should allow the bank to cope with the termination of the asset guarantee in 2015 and to redeem the State PS in line with the agreed timeline with its own capital means, while complying with the regulatory capital requirements. The Commission notes that in the context of financial projections in the base case, the bank provided information about its capital position until 2018, (56) demonstrating that the implementation of the exit strategy leads to CET1 and equity ratios of [12-13] % and [14-15] % respectively. The Commission welcomes the commitment of the associated Volksbanken to support ÖVAG in the completion of the exit strategy for the State PS. (57) According to the sensitivity analysis provided by the bank, if the adverse development in ÖVAG’s non-core segment were to materialise, the associated Volksbanken would have sufficient own funds to allow ÖVAG to redeem the State PS while still complying with the regulatory requirements. The Commission considers that the exit strategy together with the adequate RoE achieved by the end of the restructuring period ensure that the State aid received by ÖVAG is terminated by means of repayment, expiry or remuneration on market terms.

56

57

| (109) | Consequently, the Commission considers that the new restructuring plan submitted by Austria for ÖVAG fulfils the requirements of the Restructuring Communication with regard to the restoration of long-term viability and thereby allays the doubts expressed in that respect in the opening Decision. |
| --- | --- |

(109)

Consequently, the Commission considers that the new restructuring plan submitted by Austria for ÖVAG fulfils the requirements of the Restructuring Communication with regard to the restoration of long-term viability and thereby allays the doubts expressed in that respect in the opening Decision.

5.4.2.   Own contribution and burden-sharing

Own contribution and burden-sharing

| (110) | As stated in the Restructuring Communication, banks and their stakeholders need to contribute to the restructuring as much as possible in order to ensure that aid is limited to the minimum necessary. Thus banks should use their own resources to finance the restructuring, for instance by selling assets, while the stakeholders should absorb the losses of the bank where possible. The measures committed to by ÖVAG ensure that own resources are used and that original shareholders and private investors holding hybrid capital of the bank contribute to the restructuring. |
| --- | --- |

(110)

As stated in the Restructuring Communication, banks and their stakeholders need to contribute to the restructuring as much as possible in order to ensure that aid is limited to the minimum necessary. Thus banks should use their own resources to finance the restructuring, for instance by selling assets, while the stakeholders should absorb the losses of the bank where possible. The measures committed to by ÖVAG ensure that own resources are used and that original shareholders and private investors holding hybrid capital of the bank contribute to the restructuring.

| (111) | The new restructuring plan does not contain any elements that suggest that the aid exceeds the means required to cover the costs which are triggered by the restoration of viability. The aid received is required to ensure that ÖVAG will have reasonable capital buffers above the minimum requirements stipulated by the CRD IV/CRR (58) framework in the base case and will be able to comply with those requirements in a stress scenario. The commitments provided by the bank and Austria ensure that the reversible aid measures (PS and asset guarantee) are terminated as soon as the capital position of the bank allows for it, starting from the end of 2015. (59) |
| --- | --- |

(111)

The new restructuring plan does not contain any elements that suggest that the aid exceeds the means required to cover the costs which are triggered by the restoration of viability. The aid received is required to ensure that ÖVAG will have reasonable capital buffers above the minimum requirements stipulated by the CRD IV/CRR (58) framework in the base case and will be able to comply with those requirements in a stress scenario. The commitments provided by the bank and Austria ensure that the reversible aid measures (PS and asset guarantee) are terminated as soon as the capital position of the bank allows for it, starting from the end of 2015. (59)

58

59

| (112) | In respect of the contribution to covering the restructuring costs through internal resources generated by ÖVAG, the Commission notes that the bank has carried out and will continue to implement cost-cutting measures. (60) In the core segment those cost-cutting measures will result in a reduction of the annual costs by EUR 15 million by the end of the restructuring period, which represents about 12 % of the total costs in 2012. In ÖVAG as a whole (including the non-core segment), the cost will be reduced even more significantly (EUR 105,5 million in 2017 compared to EUR 166 million in 2012, which represents a reduction by 36 %). (61) |
| --- | --- |

(112)

In respect of the contribution to covering the restructuring costs through internal resources generated by ÖVAG, the Commission notes that the bank has carried out and will continue to implement cost-cutting measures. (60) In the core segment those cost-cutting measures will result in a reduction of the annual costs by EUR 15 million by the end of the restructuring period, which represents about 12 % of the total costs in 2012. In ÖVAG as a whole (including the non-core segment), the cost will be reduced even more significantly (EUR 105,5 million in 2017 compared to EUR 166 million in 2012, which represents a reduction by 36 %). (61)

60

61

| (113) | Further, the restructuring costs are financed by proceeds from the divestments of stakes in profitable non-core entities (RZB, retail subsidiaries in Austria (already implemented in 2009-2010), VBLI). |
| --- | --- |

(113)

Further, the restructuring costs are financed by proceeds from the divestments of stakes in profitable non-core entities (RZB, retail subsidiaries in Austria (already implemented in 2009-2010), VBLI).

| (114) | Point 24 of the Restructuring Communication states that an adequate remuneration of the State capital is also a means of achieving burden-sharing. In that context the Commission recalls that it established in recital 90 that the State, which contributed to the 2012 recapitalisation, obtained an appropriate stake in the bank. That stake was based on a company value determined objectively by means of a market-based P/B approach. Further, as established in recital 89 the 2012 recapitalisation measure is subscribed at a sufficient discount, which is a form of an ex-ante remuneration of the capital injection. Therefore, the Commission considers the level of remuneration appropriate in association with the other burden-sharing measures. |
| --- | --- |

(114)

Point 24 of the Restructuring Communication states that an adequate remuneration of the State capital is also a means of achieving burden-sharing. In that context the Commission recalls that it established in recital 90 that the State, which contributed to the 2012 recapitalisation, obtained an appropriate stake in the bank. That stake was based on a company value determined objectively by means of a market-based P/B approach. Further, as established in recital 89 the 2012 recapitalisation measure is subscribed at a sufficient discount, which is a form of an ex-ante remuneration of the capital injection. Therefore, the Commission considers the level of remuneration appropriate in association with the other burden-sharing measures.

| (115) | As regards the remaining State PS of EUR 300 million, the Commission recalls that State PS was provided to ÖVAG in the context of the Austrian bank support scheme and the remuneration of the instrument was fixed in line with that scheme. The Commission observes that in the sixth and seventh full financial year after the subscription of the instruments the coupon increases yearly by 50 basis points, which translates to a coupon of 9,8 % in 2016 and 10,3 % in 2017. (62) Further, it notes that the redemption of those instruments in 2017 and 2018 will require repayment of 100 % of the nominal increased by the percentage points by which the coupon on the PS fell short of the contractual value when distributable yearly profits would have sufficed for the payment but instead were retained by the bank. (63) Based on the financial projections of the bank, it can be reasonably expected that the amount of redemption paid to the State in 2017 and 2018 will include the remuneration of the PS capital attributable to the last years of the restructuring period. Therefore, the Commission considers that ÖVAG will pay remuneration on the State PS, which is adequate to the risk profile of ÖVAG. |
| --- | --- |

(115)

As regards the remaining State PS of EUR 300 million, the Commission recalls that State PS was provided to ÖVAG in the context of the Austrian bank support scheme and the remuneration of the instrument was fixed in line with that scheme. The Commission observes that in the sixth and seventh full financial year after the subscription of the instruments the coupon increases yearly by 50 basis points, which translates to a coupon of 9,8 % in 2016 and 10,3 % in 2017. (62) Further, it notes that the redemption of those instruments in 2017 and 2018 will require repayment of 100 % of the nominal increased by the percentage points by which the coupon on the PS fell short of the contractual value when distributable yearly profits would have sufficed for the payment but instead were retained by the bank. (63) Based on the financial projections of the bank, it can be reasonably expected that the amount of redemption paid to the State in 2017 and 2018 will include the remuneration of the PS capital attributable to the last years of the restructuring period. Therefore, the Commission considers that ÖVAG will pay remuneration on the State PS, which is adequate to the risk profile of ÖVAG.

62

63

| (116) | As regards the asset guarantee, the Commission notes that the bank will pay a fee of 10 % p.a. on the amount of the guarantee, i.e. EUR 100 million. Accounting-wise, the fee is a regular expense item and does not depend on the bank's profitability. Also, any amounts called under the guarantee are remunerated at the level of 10 % until their repayment. Given the reliable character and the level of the fee, the Commission considers that the remuneration of the asset guarantee, which has in fact the character of a temporary capital increase, is adequate. |
| --- | --- |

(116)

As regards the asset guarantee, the Commission notes that the bank will pay a fee of 10 % p.a. on the amount of the guarantee, i.e. EUR 100 million. Accounting-wise, the fee is a regular expense item and does not depend on the bank's profitability. Also, any amounts called under the guarantee are remunerated at the level of 10 % until their repayment. Given the reliable character and the level of the fee, the Commission considers that the remuneration of the asset guarantee, which has in fact the character of a temporary capital increase, is adequate.

| (117) | Moreover, in order to ensure that the owners of the bank participate to the maximum extent in the reconstitution of an adequate capital basis over the restructuring period, Austria committed that the bank will retain dividends and not pay any coupons which it is not under law obliged to pay until the end of the restructuring period or beyond if the State PS is not repaid by then. Thereby, in line with point 26 of the Restructuring Communication, ÖVAG should not use State aid to make payments on own funds if there are insufficient profits to make such payments. |
| --- | --- |

(117)

Moreover, in order to ensure that the owners of the bank participate to the maximum extent in the reconstitution of an adequate capital basis over the restructuring period, Austria committed that the bank will retain dividends and not pay any coupons which it is not under law obliged to pay until the end of the restructuring period or beyond if the State PS is not repaid by then. Thereby, in line with point 26 of the Restructuring Communication, ÖVAG should not use State aid to make payments on own funds if there are insufficient profits to make such payments.

| (118) | The Commission further observes that ÖVAG offered to buy hybrid instruments back from private investors at the price corresponding to around 40 % of their nominal value. (64) The offered buy-back price was determined on the basis of the market value of the instruments and contained a premium of not more than 10 percentage points, which was added to incentivise investors to participate in the buy-back. The offer was accepted for almost 80 % of the instruments' total nominal value, which after taking the costs of the transaction into consideration left ÖVAG with a profit of EUR 130 million. The still outstanding instruments are subject to the coupon ban explained in recital (117). Therefore, the Commission considers that an adequate burden-sharing from ÖVAG’s private hybrid investors is ensured and the requirements of the Restructuring Communication in that respect are met. |
| --- | --- |

(118)

The Commission further observes that ÖVAG offered to buy hybrid instruments back from private investors at the price corresponding to around 40 % of their nominal value. (64) The offered buy-back price was determined on the basis of the market value of the instruments and contained a premium of not more than 10 percentage points, which was added to incentivise investors to participate in the buy-back. The offer was accepted for almost 80 % of the instruments' total nominal value, which after taking the costs of the transaction into consideration left ÖVAG with a profit of EUR 130 million. The still outstanding instruments are subject to the coupon ban explained in recital (117). Therefore, the Commission considers that an adequate burden-sharing from ÖVAG’s private hybrid investors is ensured and the requirements of the Restructuring Communication in that respect are met.

64

| (119) | Another aspect concerns ERGO Group, RZB and DZ Bank, the minority shareholders of ÖVAG. The Commission notes first that they have been diluted significantly in the 2012 capital increase. Second, as explained in recital 49, they committed to support the restructuring of the bank by leaving the previously provided liquidity facilities at the disposal of ÖVAG and subsidiaries that are held in common with it, taking over portfolios of assets and supporting ÖVAG in its efforts to divest those subsidiaries that are held in common with it (VBRO and VBLI), thereby accelerating the reduction of the non-core activities. |
| --- | --- |

(119)

Another aspect concerns ERGO Group, RZB and DZ Bank, the minority shareholders of ÖVAG. The Commission notes first that they have been diluted significantly in the 2012 capital increase. Second, as explained in recital 49, they committed to support the restructuring of the bank by leaving the previously provided liquidity facilities at the disposal of ÖVAG and subsidiaries that are held in common with it, taking over portfolios of assets and supporting ÖVAG in its efforts to divest those subsidiaries that are held in common with it (VBRO and VBLI), thereby accelerating the reduction of the non-core activities.

| (120) | Therefore the cost reductions, divestment of profitable non-core subsidiaries and assurance of an adequate remuneration for both the capital measures and asset guarantee represent sufficient own contribution by ÖVAG to the costs of its restructuring. The losses borne by the hybrid capital holders, dilution of the original shareholders and the measures by which they contribute to the restructuring of ÖVAG, as well as profit retention, ensure appropriate burden-sharing. As the new restructuring plan can be considered as providing for an appropriate own contribution and burden-sharing, the doubts expressed in the opening Decision in that respect are allayed. |
| --- | --- |

(120)

Therefore the cost reductions, divestment of profitable non-core subsidiaries and assurance of an adequate remuneration for both the capital measures and asset guarantee represent sufficient own contribution by ÖVAG to the costs of its restructuring. The losses borne by the hybrid capital holders, dilution of the original shareholders and the measures by which they contribute to the restructuring of ÖVAG, as well as profit retention, ensure appropriate burden-sharing. As the new restructuring plan can be considered as providing for an appropriate own contribution and burden-sharing, the doubts expressed in the opening Decision in that respect are allayed.

5.4.3.   Measures to limit distortions of competition

Measures to limit distortions of competition

| (121) | The Restructuring Communication requires that the restructuring plan proposes measures limiting distortions of competition and ensuring a competitive banking sector. Moreover, they should also address moral hazard issues and ensure that State aid is not used to fund anti-competitive behaviour. |
| --- | --- |

(121)

The Restructuring Communication requires that the restructuring plan proposes measures limiting distortions of competition and ensuring a competitive banking sector. Moreover, they should also address moral hazard issues and ensure that State aid is not used to fund anti-competitive behaviour.

| (122) | Point 31 of the Restructuring Communication states that when assessing the amount of aid and the resulting competition distortions, the Commission has to take into account both the absolute and relative amount of the State aid received as well as the degree of burden-sharing and the position of the financial institution on the market after the restructuring. In that respect, the Commission recalls that ÖVAG has received State capital equivalent to 3,8 % of RWA. In addition, ÖVAG has obtained liquidity guarantees amounting to 5,4 % of the bank's balance sheet. The amount of aid to the beneficiary is, therefore, significant. Consequently significant measures are necessary in order to limit potential distortions of competition even when considering the appropriate own contribution and burden-sharing of the beneficiary and its shareholders over the restructuring period. |
| --- | --- |

(122)

Point 31 of the Restructuring Communication states that when assessing the amount of aid and the resulting competition distortions, the Commission has to take into account both the absolute and relative amount of the State aid received as well as the degree of burden-sharing and the position of the financial institution on the market after the restructuring. In that respect, the Commission recalls that ÖVAG has received State capital equivalent to 3,8 % of RWA. In addition, ÖVAG has obtained liquidity guarantees amounting to 5,4 % of the bank's balance sheet. The amount of aid to the beneficiary is, therefore, significant. Consequently significant measures are necessary in order to limit potential distortions of competition even when considering the appropriate own contribution and burden-sharing of the beneficiary and its shareholders over the restructuring period.

| (123) | In the new restructuring plan the projected balance sheet reduction has been further increased compared to the initial restructuring plan. ÖVAG will reduce its balance sheet on the basis of a comparison with the assets at the end of 2008 by 67 %, from EUR 55,8 billion to EUR 18,4 billion in 2017. If total assets of the core segment only are taken into account (EUR [12-15] billion in 2017) the reduction amounts to [60-80] %. In terms of RWA, the bank will reduce its size by 71 % (EUR 35,2 billion in 2008 vs. EUR 10,1 billion in 2017). EUR [4-6] billion of these RWA of EUR 10,1 billion relate to the core segment, which translates into a reduction of RWA by [70-90] % when only the core segment is considered. |
| --- | --- |

(123)

In the new restructuring plan the projected balance sheet reduction has been further increased compared to the initial restructuring plan. ÖVAG will reduce its balance sheet on the basis of a comparison with the assets at the end of 2008 by 67 %, from EUR 55,8 billion to EUR 18,4 billion in 2017. If total assets of the core segment only are taken into account (EUR [12-15] billion in 2017) the reduction amounts to [60-80] %. In terms of RWA, the bank will reduce its size by 71 % (EUR 35,2 billion in 2008 vs. EUR 10,1 billion in 2017). EUR [4-6] billion of these RWA of EUR 10,1 billion relate to the core segment, which translates into a reduction of RWA by [70-90] % when only the core segment is considered.

| (124) | To that end, ÖVAG is in the course of divesting a significant number of domestic and foreign subsidiaries. Those divestments need to be completed by the date specified in the commitments in the Annex, or the relevant subsidiaries have to stop new business. An overview of the largest divestments is given in Table 4:

  Table 4


  Major divestments








  Name | Balance sheet, in EUR billion | RWA, in EUR billion |
| --- | --- | --- | --- |
| Austrian retail subsidiaries | 5,1 | 2,0 |
| Europolis | 1,7 | 0,1 |
| Sale of VBI in 2011 | 9,1 | 6,0 |
| VBLI | 2,1 | 1,6 |
| VBRO | 1,7 | 1,6 |
| Malta | 0,2 | 0,1 |

(124)

To that end, ÖVAG is in the course of divesting a significant number of domestic and foreign subsidiaries. Those divestments need to be completed by the date specified in the commitments in the Annex, or the relevant subsidiaries have to stop new business. An overview of the largest divestments is given in Table 4:

Table 4

Table 4

Major divestments

Major divestments

Name

Balance sheet, in EUR billion

RWA, in EUR billion

Austrian retail subsidiaries

5,1

2,0

Europolis

1,7

0,1

Sale of VBI in 2011

9,1

6,0

VBLI

2,1

1,6

VBRO

1,7

1,6

Malta

0,2

0,1

| (125) | Those divestments include all of the bank's international subsidiaries. The Commission considers that the divestment of KA, which necessitated a rescue by the State in 2008, contributed to the stabilisation of ÖVAG. Therefore, KA cannot be considered as measure to limit the distortion of competition. Furthermore, the balance sheet size and the volume of RWA taken as the reference point for the calculation of the reduction of the bank's size do not contain KA. (65) |
| --- | --- |

(125)

Those divestments include all of the bank's international subsidiaries. The Commission considers that the divestment of KA, which necessitated a rescue by the State in 2008, contributed to the stabilisation of ÖVAG. Therefore, KA cannot be considered as measure to limit the distortion of competition. Furthermore, the balance sheet size and the volume of RWA taken as the reference point for the calculation of the reduction of the bank's size do not contain KA. (65)

65

| (126) | Furthermore, ÖVAG will liquidate its Frankfurt branch. |
| --- | --- |

(126)

Furthermore, ÖVAG will liquidate its Frankfurt branch.

| (127) | Altogether, the Commission considers the reduction of the balance sheet total of the bank by more than half to be sufficient to adequately limit the distortions of competition stemming from the aid. |
| --- | --- |

(127)

Altogether, the Commission considers the reduction of the balance sheet total of the bank by more than half to be sufficient to adequately limit the distortions of competition stemming from the aid.

| (128) | In addition to those far-reaching structural measures, Austria and ÖVAG also agreed to several behavioural constraints. The bank has committed to observe acquisition and advertisement bans, a ban on proprietary trading and price leadership ban relating to Livebank, its online banking platform. That should ensure that State aid is not used to fund anti-competitive behaviour. (66) |
| --- | --- |

(128)

In addition to those far-reaching structural measures, Austria and ÖVAG also agreed to several behavioural constraints. The bank has committed to observe acquisition and advertisement bans, a ban on proprietary trading and price leadership ban relating to Livebank, its online banking platform. That should ensure that State aid is not used to fund anti-competitive behaviour. (66)

66

| (129) | Furthermore, Austria gave a commitment that ÖVAG will not, in its own name, conduct any business on the asset side with any third parties outside the Volksbanken sector and their clients. It may only act within the Volksbankenverbund. (67) Coupled with the divestments of profitable subsidiaries (VBLI, retail banking subsidiaries in Austria), that strict limitation of ÖVAG's scope of activities in its core markets offers an opportunity for other players to expand their market presence. |
| --- | --- |

(129)

Furthermore, Austria gave a commitment that ÖVAG will not, in its own name, conduct any business on the asset side with any third parties outside the Volksbanken sector and their clients. It may only act within the Volksbankenverbund. (67) Coupled with the divestments of profitable subsidiaries (VBLI, retail banking subsidiaries in Austria), that strict limitation of ÖVAG's scope of activities in its core markets offers an opportunity for other players to expand their market presence.

67

| (130) | Based on the considerations in recitals 122-129 and in view of the conclusion that the own contribution and burden-sharing are appropriate, the Commission considers that the scale and nature of measures proposed by Austria and ÖVAG are sufficient to limit distortions of competition caused by the aid to ÖVAG. Therefore the doubts raised in that respect in the opening Decision are allayed. |
| --- | --- |

(130)

Based on the considerations in recitals 122-129 and in view of the conclusion that the own contribution and burden-sharing are appropriate, the Commission considers that the scale and nature of measures proposed by Austria and ÖVAG are sufficient to limit distortions of competition caused by the aid to ÖVAG. Therefore the doubts raised in that respect in the opening Decision are allayed.

5.5.   Monitoring

Monitoring

| (131) | Pursuant to section 5 of the Restructuring Communication, regular reports are required to allow the Commission to verify that the new restructuring plan is being implemented properly. Austria will ensure that ÖVAG appoints a monitoring trustee who will assist the Commission in its obligation to verify the correct implementation of the decision. The Trustee will provide semi-annual monitoring reports. The first report should be submitted not later than six months after the approval of the restructuring plan. The Commission therefore finds that proper monitoring of the implementation of the restructuring plan is ensured. |
| --- | --- |

(131)

Pursuant to section 5 of the Restructuring Communication, regular reports are required to allow the Commission to verify that the new restructuring plan is being implemented properly. Austria will ensure that ÖVAG appoints a monitoring trustee who will assist the Commission in its obligation to verify the correct implementation of the decision. The Trustee will provide semi-annual monitoring reports. The first report should be submitted not later than six months after the approval of the restructuring plan. The Commission therefore finds that proper monitoring of the implementation of the restructuring plan is ensured.

6.   CONCLUSION

CONCLUSION

| (132) | The Commission finds that the measures in the new restructuring plan, together with the commitments in the Annex, (68) will enable ÖVAG to ensure its long-term viability, are sufficient with respect to burden-sharing and own contribution, and are appropriate and proportional to offset the competition distorting effects of the aid measures examined in the present Decision. The restructuring plan submitted fulfils the criteria of the Restructuring Communication and the aid measures can therefore be considered compatible with the internal market. |
| --- | --- |

(132)

The Commission finds that the measures in the new restructuring plan, together with the commitments in the Annex, (68) will enable ÖVAG to ensure its long-term viability, are sufficient with respect to burden-sharing and own contribution, and are appropriate and proportional to offset the competition distorting effects of the aid measures examined in the present Decision. The restructuring plan submitted fulfils the criteria of the Restructuring Communication and the aid measures can therefore be considered compatible with the internal market.

68

HAS ADOPTED THIS DECISION:

Article 1

1.   The following measures implemented or planned by Austria constitute State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union:

| (a) | the recapitalisation measures of EUR 1 billion and EUR 250 million to Österreichische Volksbanken AG by Austria; |
| --- | --- |

(a)

the recapitalisation measures of EUR 1 billion and EUR 250 million to Österreichische Volksbanken AG by Austria;

| (b) | the liquidity guarantees granted by Austria to Österreichische Volksbanken AG in the amount of EUR 3 billion; |
| --- | --- |

(b)

the liquidity guarantees granted by Austria to Österreichische Volksbanken AG in the amount of EUR 3 billion;

| (c) | the asset guarantee to Österreichische Volksbanken AG by Austria with the capital relief effect of EUR 100 million. |
| --- | --- |

(c)

the asset guarantee to Österreichische Volksbanken AG by Austria with the capital relief effect of EUR 100 million.

2.   The State aid referred to in paragraph 1 is compatible with the internal market, within the meaning of Article 107(3)(b) of the Treaty on the Functioning of the European Union, subject to the conditions set out in Article 2.

Article 2

Austria shall ensure that the restructuring plan submitted on 4 September 2012 is implemented in full, including the commitments set out in the Annex to this Decision.

Article 3

This Decision is addressed to the Republic of Austria.

Done at Brussels, 19 September 2012.

For the Commission

Joaquín ALMUNIA

Vice-President

---

(1)  
  OJ C 46, 17.2.2012, p. 3.

1

(2)  Commission Decision of 9 December 2008 in State aid case N 557/2008 – Maßnahmen nach dem Finanzmarktstabilitäts- und dem Interbankmarktstärkungsgesetz für Kreditinstitute und Versicherungsunternehmen in Österreich, OJ C 3, 8.1.2009, p. 2.

2

Maßnahmen nach dem Finanzmarktstabilitäts- und dem Interbankmarktstärkungsgesetz für Kreditinstitute und Versicherungsunternehmen in Österreich

(3)  The first extension of the scheme, including certain amendments, was approved on 30 June 2009 (OJ C 172, 24.7.2009, p. 4), the second extension on 17 December 2009 (OJ C 28, 4.2.2010, p. 6), the third extension on 25 June 2010 (OJ C 250, 17.9.2010, p. 4) and the fourth extension on 16 December 2010 (OJ C 20, 21.1.2011, p. 3).

3

(4)  See point 13 and the Annex to the Commission Communication, OJ C 10, 15.1.2009, p. 2.

4

(5)  Commission Decision of 9 December 2011 in the case SA.31883, Restructuring of Österreichische Volksbanken AG, OJ C 46, 17.2.2012, p. 3.

5

(6)  Those percentages describe the structure of the voting rights. They exclude treasury shares held by ÖVAG. Before the capital cut by 70 % and the planned capital increase by EUR 484 million ÖVAG held 1,63 % of its own shares.

6

(7)  Already down from EUR 78,6 billion total assets as per end 2007. Source: ÖVAG's annual report 2009.

7

(8)  Fitch takes into account the fact that ÖVAG is a member of the protection scheme of the Volksbanken Verbund. That is why ÖVAG has the same long- and short-term Issuer Default Rating as the whole group (‧A‧ and ‧F1‧ respectively).

8

(9)  Opening decision, recitals 7-12.

9

(10)  Opening decision, recitals 13-19.

10

(11)  Investkredit Bank AG is a subsidiary of ÖVAG, which provides corporate lending, factoring, project financing, trade and export financing. More information about it is provided in recital 7 of the opening Decision.

11

(12)  That redemption value is increased by the percentage points by which the dividend on the PS capital fell short of the contractual value when distributable yearly profits would have sufficed for the payment but instead were retained, although the bank was not obliged to do so by regulatory or supervisory requirements.

12

(13)  Common Equity Tier 1 as defined by the Basel Committee on Banking Supervision ("Basel III: A global regulatory framework for more resilient banks and banking systems", December 2010 (rev. June 2011) http://www.bis.org/publ/bcbs189.htm).

13

(14)  ÖVAG and its subsidiaries/participations, in particular VB Factoring Bank Aktiengesellschaft, VB Leasing Finanzierungsgesellschaft m. b. H. and Volksbank Invest Kapitalanlagegesellschaft m. b. H.

14

(15)  That fee will be a regular expense item of the bank and therefore does not depend on ÖVAG being profitable.

15

(16)  After the sale of its public finance subsidiary KA to Austria ÖVAG's balance sheet total was EUR 52,9 billion at the end of 2008.

16

(*1)  Contains business secrets, where possible, ranges were provided in [brackets]

*1

(17)  Bankwesengesetz (BWG).

17

(18)  Including syndicated loans provided together with IMMO Bank, which is the specialist for the residential property financing within the Volksbanken sector.

18

(19)  The other shareholder is VR Leasing (a subsidiary of DZ Bank).

19

(20)  See point 6.3 of the Annex.

20

(21)  See point 6.3 of the Annex.

21

(22)  See point 6.3 of the Annex.

22

(23)  See point 6.3 of the Annex.

23

(24)  See point 6.4 of the Annex.

24

(25)  See recital 49.

25

(26)  [...].

26

(27)  See recital 10.

27

(28)  See recital 23.

28

(29)  taking into account the effect of expiry of the asset guarantee;

29

(30)  taking into account the effect of expiry of the asset guarantee and the redemption of the PS capital.

30

(31)  That figure includes the effect of the expiry of the asset guarantee in 2015 and the redemption of the PS of EUR 300 million.

31

(32)  Opening decision, recitals 58-62.

32

(33)  Opening decision, recitals 65-69, 73 and 74.

33

(34)  
  OJ C 356, 6.12.2011, p.7.

34

(35)  The selection of the peer group was based on objective criteria, such as comparable products range and geographic scope of activities.

35

(36)  See points 8.2 and 8.3 of the Annex.

36

(37)  See points 8.5 and 8.4 of the Annex.

37

(38)  See point 8.1 of the Annex

38

(39)  See point 8.6 of the Annex.

39

(40)  See points 6.1-6.4 of the Annex.

40

(41)  
  OJ C 195, 19.8.2009, p. 9.

41

(42)  Commission Decision of 9 December 2008 in State aid case N 557/2008 – Maßnahmen nach dem Finanzmarktstabilitäts- und dem Interbankmarktstärkungsgesetz für Kreditinstitute und Versicherungsunternehmen in Österreich, OJ C 3, 8.1.2009, p. 2; extended by Commission Decision N 352/2009 of 30 June 2009 (OJ C 172, 24.7.2009, p. 4), further extended by Commission Decision N 663/2009 of 17 December 2009 (OJ C 28, 4.2.2010, p. 6), further extended by Commission Decision N 241/2010 of 25 June 2010 (OJ C 250, 17.9.2010, p. 4) and further extended by Commission Decision SA.32018 of 16 December 2010 (OJ C 20, 21.1.2011, p. 3).

42

(43)  See apart from the decisions on the Austrian bank support scheme Commission Decision in State aid case N 698/2009, Hypo Group Alpe Adria, OJ C 85, 31.3.2010, p. 21; Commission Decision in State aid case N 261/2010, Second restructuring aid for BAWAG, OJ C 250, 17.9.2010, p. 5; and Commission Decision in State aid case SA.32745, Restructuring of Kommunalkredit Austria AG, OJ C 239, 17.8.2011, p. 2.

43

(44)  It can also be noted that Austria granted the aid to ÖVAG under the Austrian bank rescue scheme which has been authorised by the Commission on the basis of Article 107(3)(b) of the Treaty.

44

(45)  See footnote 2 and footnote 3 of this decision.

45

(46)  Theoretical ex-rights price.

46

(47)  Commission Decision of 30 May 2012 in State aid case SA.34055, New recapitalisation scheme for credit institution in Portugal, not yet published.

47

(48)  Because of the application of TERP methodology, that discount already takes into account the dilution effect.

48

(49)  See recital 23.

49

(50)  See reference in footnotes 2 and 3.

50

(51)  See recital 44.

51

(52)  Credit Default Swaps.

52

(53)  For the year 2014 in the group’s accounts prepared in accordance with International Financial Accounting Standards, ÖVAG expects a loss after taxes of EUR [10-30] million, which is mainly due to an extraordinary item, the sale of VBLI at the price of EUR [40-70] million, which is assumed to be below its IFRS book value of EUR [90-120] million. In the accounts of ÖVAG as a single entity prepared in accordance with Austrian Generally Accepted Accounting Principles the book value of VBLI has already been written down to EUR [40-70] million. Therefore, ÖVAG’s result for the year 2014 under Austrian GAAP is not expected to be affected by the sale proceeds and will be positive.

53

(54)  Taking into account the expiry of the asset guarantee in 2015 and the redemption of EUR 150 million of the State PS capital in 2017.

54

(55)  See recitals 58 and 59.

55

(56)  See recital 55.

56

(57)  See recital 60.

57

(58)  The term ‧CRD IV/CRR‧ (Capital Requirements Directive IV/Capital Requirements Regulation) refers to the proposal of the European Commission, how to transpose Basel III rules into European Union law. Basel III, on the other hand, is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk, developed and agreed upon in response to the deficiencies in financial regulation revealed by the recent financial crisis. Among others, it sets quantitatively and qualitatively stricter capital requirements for banks. The gradual phasing-in of the new requirements is to start in 2013

58

(59)  See recitals 25-27.

59

(60)  See recital 60.

60

(61)  However, that impact includes the effects of divestments and scaling-down of operations in the non-core segment.

61

(62)  See recital 18.

62

(63)  See recital 19.

63

(64)  See recital 52.

64

(65)  ÖVAG's balance sheet and RWA, which were taken as the reference point, are the values as per 31 December 2008, while KA was sold to Austria in November 2008.

65

(66)  Since Livebank is the only part of ÖVAG's business where it is taking deposits, no price leadership ban is necessary for any other market segment.

66

(67)  See point 4.1 of the Annex.

67

(68)  In case of conflict between the text of the decision and the Annex, the conflict has to be resolved with regard to the text of the decision.

68

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ANNEX

List of commitments in state aid procedure SA.31883 Österreichische Volksbanken AG

Pursuant to Article 7(4) of Council Regulation (EC) No 659/1999, as amended, the Republic of Austria (“Austria”) hereby provides the following commitments concerning Österreichische Volksbanken-Aktiengesellschaft ("ÖVAG") in order to enable the European Commission (“the Commission”), by decision under Article 107(3)(b) of the Treaty on the Functioning of the European Union, to find aid granted to ÖVAG compatible with the internal market.

The commitments will take effect upon the date of adoption of the decision.

This text should be interpreted within the general framework of Community law and with reference to Council Regulation (EC) No 659/1999, as well as with regard to the decision to which the commitments are attached as commitments and/or conditions and obligations.

1.   General

| 1.1. | Austria is to ensure that the restructuring plan (“restructuring plan”) for ÖVAG submitted on 4 September 2012 is correct and fully implemented. |
| --- | --- |

1.1.

| 1.2. | Austria is to ensure that the commitments (“commitments”) listed below are fully observed during the implementation of the restructuring plan. |
| --- | --- |

1.2.

| 1.3. | The restructuring phase will end on 31 December 2017. The following commitments apply during the restructuring phase, unless otherwise provided. |
| --- | --- |

1.3.

2.   Core segment and winding-up segment

| 2.1. | ÖVAG has set up an internal winding-up segment to which certain assets are assigned in order to wind them up. The winding-up segment is to be managed as a segment in its own right with separate accounting in the sense of its own reporting procedure. |
| --- | --- |

2.1.

3.   Reduction of the balance sheet total and RWA

| 3.1. | [Reduction of balance sheet total – group] Starting from ÖVAG’s audited balance sheet total of EUR 48 116 million on 31 December 2009, the group’s total balance sheet assets are to be reduced to EUR [26 000-28 000] million by 31 December 2013, to EUR [22 000-24 000] million by 31 December 2014, to EUR [20 000-22 000] million by 31 December 2015, to EUR [18 000-20 000] million by 31 December 2016, and to EUR 18 390 million by 31 December 2017. |
| --- | --- |

3.1.

| 3.2. | [Reduction of RWA – group] Starting from the group’s total risk-weighted assets (from total risk) of EUR 29 505 million on 31 December 2009, these assets are to be reduced to EUR [16 000-18 000] million by 31 December 2013, to EUR [14 000-16 000] million by 31 December 2014, to EUR 11 682 million by 31 December 2015, to EUR [10 000-12 000] million by 31 December 2016, and to EUR [10 000-12 000] million by 31 December 2017. |
| --- | --- |

3.2.

| 3.3. | [Reduction of balance sheet total – core segment] The total balance sheet assets in the core segment are to be reduced to EUR [15 000-17 000] million by 31 December 2013, to EUR [15 000-17 000] million by 31 December 2014, to EUR [14 000-16 000] million by 31 December 2015, to EUR [13 000-15 000] million by 31 December 2016, and to EUR [13 000-15 000] million by 31 December 2017. These amounts may be exceeded by 2 %, as long as this is the result of increased syndicate operations with the primary level, higher regulatory requirements for retaining liquidity or a greater need for refinancing the primary institutions than originally planned. Thorough justification must be provided to the monitoring trustee in cases where these amounts are exceeded. |
| --- | --- |

3.3.

| 3.4. | [RWA reduction – core segment] The total risk-weighted assets in the core segment (total risk) are to be reduced to EUR [5 500-6 500] million by 31 December 2013, to EUR [5 000-6 000] million by 31 December 2014, to EUR [5 000-6 000] million by 31 December 2015, to EUR [5 000-6 000] million by 31 December 2016, and to EUR [5 000-6 000] million by 31 December 2017. These amounts may be exceeded by 2 %, as long as this is the result of increased syndicate operations with the primary level, higher regulatory requirements for retaining liquidity or a greater need for refinancing the primary institutions than originally planned. Thorough justification must be provided to the monitoring trustee in cases where these amounts are exceeded. |
| --- | --- |

3.4.

| 3.5. | [Reduction of balance sheet total – winding-up segment] The total balance sheet assets in the winding-up segment are to be reduced to EUR [10 000-12 000] million by 31 December 2013, to EUR [6 000-8 000] million by 31 December 2014, to EUR [6 000-8 000] by 31 December 2015, to EUR [5 000-7 000] million by 31 December 2016, and to EUR [4 000-6 000] million by 31 December 2017. |
| --- | --- |

3.5.

| 3.6. | [RWA reduction – winding-up segment] The total risk-weighted assets in the winding-up segment (total risk) are to be reduced to EUR [11 000-13 000] million by 31 December 2013, to EUR [8 000-10 000] million by 31 December 2014, to EUR [5 000-7 000] million by 31 December 2015, to EUR [5 000-7 000] million by 31 December 2016, and to EUR [4 000-6 000] million by 31 December 2017. |
| --- | --- |

3.6.

| 3.7. | Deadlines in the winding-up segment are to be extended only if there is a realistic, factual and plausible possibility that an extension will make the financing easier to use in the future. Extensions are to be granted only three times and for a maximum of one year in each case. Justified exceptions with longer extension periods are to be disclosed to the monitoring trustee and adequately justified in each individual case. At the end of the restructuring period all winding-up activities must still be brought to a close as quickly as possible. |
| --- | --- |

3.7.

| 3.8. | When calculating the amounts in Nos 3.1 – 3.6, changes due to amended legal provisions resulting from the application of the CRD IV/CRR are not to be taken into account. |
| --- | --- |

3.8.

4.   Restriction of business activities

| 4.1. | Only association-related business is to be carried out in the core business. In this connection, “association-related business” means that ÖVAG (i) is to act as a central organisation for the Volksbanken and is therefore to provide services to the directly affiliated institutions, and (ii) is to provide or procure products and services for the Volksbanken and their customers. ÖVAG is not to undertake in its own name or for its own account any credit or other lending business with third-party customers. |
| --- | --- |

4.1.

5.   Discontinuation of business areas

| 5.1. | [Discontinuation of business areas] ÖVAG is to implement the business model outlined in the restructuring plan, and in this connection to discontinue the business areas as described in the restructuring plan, with the following business areas in particular being discontinued completely:






  5.1.1. | “Renewable energy” business area. The business area includes project financing in the “renewable energy” area in Austria, Germany and countries in Eastern Europe. This does not include financing provided by the primary level Volksbanken in order to take over syndicate shares, in so far as the primary bank takes on a share of the financing in proportion to its size. |
| --- | --- | --- |

5.1.

5.1.1.

“Renewable energy” business area. The business area includes project financing in the “renewable energy” area in Austria, Germany and countries in Eastern Europe. This does not include financing provided by the primary level Volksbanken in order to take over syndicate shares, in so far as the primary bank takes on a share of the financing in proportion to its size.

| 5.1.2. | “Model financing” business area. The “model financing” business area concerns providing loans for purchasing and renovating dwellings in central locations using financial support available to creditworthy private individuals. This does not include financing provided by the primary level Volksbanken in order to take over syndicate shares, in so far as the primary bank takes on a share of the financing in proportion to its size. |
| --- | --- |

5.1.2.

“Model financing” business area. The “model financing” business area concerns providing loans for purchasing and renovating dwellings in central locations using financial support available to creditworthy private individuals. This does not include financing provided by the primary level Volksbanken in order to take over syndicate shares, in so far as the primary bank takes on a share of the financing in proportion to its size.

| 5.2. | [Trade for own account] ÖVAG is to further refrain from conducting dedicated proprietary trading. This means that ÖVAG is to carry out only trading activities indicated in its trading book that are necessary either a) for accepting, transferring and executing its customers’ sales and purchase orders (i.e. trading with financial instruments as a service), or b) for hedging customer business or interest and liquidity management in the treasury sector or c) so that the economic transfer of balance sheet items to the restructuring unit or to third parties can be carried out. It is to be ensured in any case that these items are entered into only within the overall limit of EUR 3 million value-at-risk / one-day holding period / confidence level of 99 %, and where there is no danger to ÖVAG’s risk-bearing capacity or liquidity situation. Under no circumstances will ÖVAG carry out business activities that serve purely to make a profit apart from the above-mentioned purposes. |
| --- | --- |

5.2.

6.   Sales

| 6.1. | [Sales] ÖVAG is to sell off the following entities completely (“signing”) by no later than the stated deadlines:






  6.1.1. | Sale of all shares in the leasing subsidiary VBLI by 31 December [2013-2017]; |
| --- | --- | --- |

6.1.

6.1.1.

Sale of all shares in the leasing subsidiary VBLI by 31 December [2013-2017];

| 6.1.2. | Sale of all shares in Malta/IK Malta Volksbank by 31 December [2013-2017]; |
| --- | --- |

6.1.2.

Sale of all shares in Malta/IK Malta Volksbank by 31 December [2013-2017];

| 6.1.3. | Sale of all shares in Volksbank Rumänien by 31 December [2013-2017]; |
| --- | --- |

6.1.3.

Sale of all shares in Volksbank Rumänien by 31 December [2013-2017];

| 6.1.4. | Sale of all shares in RZB by 31 December [2013-2017]; |
| --- | --- |

6.1.4.

Sale of all shares in RZB by 31 December [2013-2017];

| 6.2. | The buyers of the entities stated in Nos 6.1.1 - 6.1.4 must be persons that are legally and economically independent of the Republic of Austria and VB Holding / the primary level banks |
| --- | --- |

6.2.

| 6.3. | If the shares mentioned in Nos 6.1.1 to 6.1.3 are not sold by the deadlines laid down there, ÖVAG will take all the measures available to it to end new business in these entities and to wind them up. ÖVAG will do everything in its power to reach an agreement with its joint partners early enough (6.1.1 and 6.1.3) to end the new business by the stipulated deadlines. |
| --- | --- |

6.3.

| 6.4. | If the shares mentioned in No 6.1.4 have not been sold by the deadline stipulated there, an official sales agent is to organise the sale. |
| --- | --- |

6.4.

7.   Measures by DZ Bank, ERGO and RZB

| 7.1. | Austria is to ensure that Deutsche Zentral-Genossenschaftsbank (DZ Bank), ERGO Gruppe and Raiffeisen Zentralbank Österreich AG (RZB) implement the planned measures, as laid down in the restructuring agreement (“restructuring agreement”) reached on 26 April 2012 between the Republic of Austria and DZ Bank AG, ERGO Versicherung AG and ERGO Versicherungsgruppe AG, Raiffeisen Zentralbank Österreich AG, Volksbanken Holding eingetragene Genossenschaft, Österreichischer Genossenschaftsverband and ÖVAG. |
| --- | --- |

7.1.

8.   Other rules of conduct / Corporate Governance

| 8.1. | [Ban on acquisitions] ÖVAG commits to refrain from making acquisitions. This applies to both the purchase of companies with their own legal structure, and shares in companies, as well as asset bundles that represent a commercial transaction or a branch of activity. This does not apply to acquisitions that must be made in order to maintain financial and/or association-related stability, or in the interests of effective competition, provided that they have been approved beforehand by the Commission. This does not apply either to acquisitions that belong, in terms of the management of existing obligations of customers in financial difficulty, to a bank's normal ongoing business. The obligation is to apply until the restructuring phase ends. |
| --- | --- |

8.1.

| 8.2. | [Dividend ban] ÖVAG will not pay dividends in the period up to and including the financial year ending 31 December 2017. The payments pursuant to No 10 are not affected by this, provided this is separable in a legal sense. |
| --- | --- |

8.2.

| 8.3. | [Hybrids] Until 31 December 2017, ÖVAG may not make any payments in respect of profit-related equity instruments (such as hybrid financial instruments and profit participation certificates (Genussscheine), in so far as those payments are not owed on the basis of a contract or the law. If ÖVAG’s balance sheet were to indicate a loss before the adjustment of reserves and retained earnings, the above-mentioned instruments must also participate fully in the loss pursuant to the possibilities under supervisory and civil law. In this connection, ÖVAG is to undertake not to draw on reserves in the case of losses until 31 December 2017. |
| --- | --- |

8.3.

| 8.4. | [Ban on price leadership] In the area of deposit services, the Live Bank is prohibited until 31 December 2015 from offering better interest rate conditions (for all maturities) than its competitor with the third-best conditions on the Austrian market for direct online banking without the Commission's prior approval. |
| --- | --- |

8.4.

| 8.5. | [Advertising] ÖVAG must not use the granting of the aid measures or any advantages arising therefrom for advertising purposes. |
| --- | --- |

8.5.

| 8.6. | [Remuneration of bodies, employees and essential agents] ÖVAG must verify the incentive effect and appropriateness of its remuneration systems and ensure, using the possibilities under civil law, that they do not result in exposure to undue risks, are oriented towards sustainable, long-term company objectives, and are transparent. |
| --- | --- |

8.6.

| 8.7. | [Other rules of conduct] ÖVAG is to continue expansion of its risk-monitoring operations and to conduct a commercial policy that is prudent, sound and oriented towards sustainability. |
| --- | --- |

8.7.

9.   ÖVAG and primary institutions

| 9.1. | [Remuneration for liquidity reserves] Pursuant to Section 25(13) of the Austrian Banking Act, ÖVAG is to pay a remuneration for the liquidity reserve to the primary institutions of no more than the three-month Euribor rate plus [40-70] basis points ("bp") for their deposits. On 1 January 2014 and 1 January 2015 the cost rate will be reduced in each case by [5-10] bp, and by a further [3-7] bp on 1 January 2016 and 1 January 2017, so that the conditions are the same as the three-month Euribor rate plus [20-40] bp from 1 January 2017. With the Commission’s explicit approval other fund transfer pricing components can also be used, provided it can be demonstrated that the profit from reducing the conditions for interest paid on the liquidity reserves as described here, is at least achieved. |
| --- | --- |

9.1.

| 9.2. | [Fees] ÖVAG is to retain all the fees it charges for business brought in through the LiveBank's website. |
| --- | --- |

9.2.

| 9.3. | [Distribution of dividends to the primary institutions] Dividends may be distributed to the primary institutions within the framework laid down in the restructuring agreement, provided that the limit of EUR [7-10] million mentioned there under No 7.2 is reduced to EUR [5-8] million and only to the extent that, where dividends are to be distributed under No 7.2, sufficient profits were made and also new, external base capital was raised (net, after the deduction of repayments) to at least cover (compensation for profits not retained) the amount distributed (to equity investors and to the Federal Government). |
| --- | --- |

9.3.

10.   Remuneration of the aid measures

| 10.1. | [Remuneration of the asset guarantee] The asset guarantee of EUR 100 million provided by Austria is to be remunerated with a non-profit-related bonus of 10 % p.a. |
| --- | --- |

10.1.

| 10.2. | [Remuneration of the participation capital] The participation capital provided by the State is to be remunerated as laid down in the agreement on principle. |
| --- | --- |

10.2.

11.   Exit strategy for asset guarantee, participation capital and share capital

| 11.1. | [Return of the asset guarantee] The asset guarantee of EUR 100 million provided by Austria is to be set up in terms of its maturity in such a way that it ends immediately after 31 December 2015. |
| --- | --- |

11.1.

| 11.2. | [Repayment of the participation capital] ÖVAG undertakes to take every suitable measure to relieve the Republic of Austria of half of the burden of its position as a participant (EUR 150 million) in the first half of 2017 and of the entire burden by immediately after 31 December 2017 at the latest. The primary banks are to play a part in realising this, as far as the minimum regulatory requirements allow. |
| --- | --- |

11.2.

| 11.3. | [Exit strategy] Austria does not consider itself as the long-term owner of ÖVAG and will therefore attempt to sell the subscribed shares again as quickly as possible, taking into account budgetary interests and the provisions of the Austrian Banking Act and Section 2(3) of the Austrian Financial Market Stability Act. |
| --- | --- |

11.3.

12.   Monitoring trustee

| 12.1. | Austria is to ensure that the full and correct implementation of ÖVAG’s restructuring plan and the full and correct implementation of all commitments within this commitments document are continuously monitored by an independent, sufficiently qualified monitoring trustee who is obliged to maintain confidentiality. |
| --- | --- |

12.1.

| 12.2. | The appointment, duties, obligations and discharge of the monitoring trustee must follow the procedures set out in the “Trustee” Annex. |
| --- | --- |

12.2.

| 12.3. | Austria is to ensure that, during the implementation of the decision, the Commission or the trustee has unrestricted access to all information needed to monitor the implementation of this decision. The Commission or the trustee may ask ÖVAG for explanations and clarifications. Austria and ÖVAG are to cooperate fully with the Commission and the monitoring trustee with regard to all enquiries associated with monitoring of the implementation of this decision. |
| --- | --- |

12.3.

Annex to the list of commitments – The Monitoring Trustee

A.   Appointment of the monitoring trustee

| (i) | The Republic of Austria undertakes to ensure that ÖVAG appoints a monitoring trustee to carry out the duties of a monitoring trustee (“trustee”) as set out in paragraph C(x) of this Annex. The mandate applies to the entire duration of the restructuring; i.e. until 31 December 2017. At the end of the mandate, the trustee must submit a final report. |
| --- | --- |

(i)

| (ii) | The trustee must be independent of ÖVAG. The trustee must possess, for example as an investment bank, consultant or auditor, the specialised knowledge that is required in order to carry out its mandate, and must at no time be exposed to any conflict of interest. The trustee is to be remunerated by ÖVAG in a way that must not impede the independent and effective fulfilment of its mandate. |
| --- | --- |

(ii)

| (iii) | Austria undertakes to ensure that ÖVAG submits the names of two or more persons to the Commission for approval as monitoring trustee no later than four weeks after notification of the decision. |
| --- | --- |

(iii)

| (iv) | These proposals must contain sufficient information about those persons to enable the Commission to verify whether the proposed trustee fulfils the requirements set out in paragraph A(ii), and must in particular include the following:






  a) | the full terms of the proposed mandate with all the provisions which are necessary to enable the trustee to fulfil its duties; |
| --- | --- | --- |

(iv)

a)

the full terms of the proposed mandate with all the provisions which are necessary to enable the trustee to fulfil its duties;

| b) | the draft of a work plan describing how the trustee intends to carry out its assigned duties. |
| --- | --- |

b)

the draft of a work plan describing how the trustee intends to carry out its assigned duties.

| (v) | The Commission has the discretion to approve or reject the proposed trustees and to approve the proposed mandate subject to any modifications that it deems necessary in order to enable the trustee to fulfil its obligations. If only one name is approved, ÖVAG will appoint the person or institution concerned as trustee or cause that person or institution to be appointed, in accordance with the mandate approved by the Commission. If more than one name is approved, ÖVAG is free to decide which of the approved persons should be appointed as trustee. The trustee will be appointed within one week of the Commission’s approval, in accordance with the mandate approved by the Commission. |
| --- | --- |

(v)

| (vi) | If all the proposed trustees are rejected, Austria undertakes to ensure that ÖVAG submits the names of at least two further persons or institutions within two weeks of being informed of the rejection, in accordance with the requirements and procedure set out in paragraphs A(i) and A(iv). |
| --- | --- |

(vi)

| (vii) | If all further proposed trustees are also rejected by the Commission, the Commission will nominate a trustee which ÖVAG will appoint or cause to be appointed, in accordance with a trustee mandate approved by the Commission. |
| --- | --- |

(vii)

B.   General duties and obligations

| (viii) | The trustee is to assist the Commission to ensure ÖVAG’s compliance with the commitments and to assume the duties of a monitoring trustee specified in the commitments document. The trustee is to carry out the duties under this mandate in accordance with the work plan, as well as revisions of the work plan that have been approved by the Commission. The Commission may, on its own initiative or at the request of the trustee or ÖVAG, issue orders or instructions to the trustee in order to ensure compliance with the commitments. ÖVAG is not entitled to issue instructions to the trustee. |
| --- | --- |

(viii)

C.   Duties and obligations of the trustee

| (ix) | The duty of the trustee is to guarantee full and correct compliance with the obligations set out in the commitments, and full and correct implementation of ÖVAG’s restructuring plan. The Commission may, on its own initiative or at the request of the trustee, issue any orders or instructions to the trustee or ÖVAG in order to ensure compliance with the commitments attached to the decision. |
| --- | --- |

(ix)

| (x) | The trustee






  a) | is to propose to the Commission in its first report a detailed work plan describing how it intends to monitor compliance with the commitments attached to the decision; |
| --- | --- | --- |

(x)

a)

is to propose to the Commission in its first report a detailed work plan describing how it intends to monitor compliance with the commitments attached to the decision;

| b) | is to monitor the full and correct implementation of ÖVAG’s restructuring plan, in particular






  (I) | the reduction of the balance sheet total and the RWA |
| --- | --- | --- |

b)

is to monitor the full and correct implementation of ÖVAG’s restructuring plan, in particular

(I)

the reduction of the balance sheet total and the RWA

| (II) | the restriction of business activities; |
| --- | --- |

(II)

the restriction of business activities;

| (III) | the discontinuation of predefined business areas; |
| --- | --- |

(III)

the discontinuation of predefined business areas;

| (IV) | The sales process for shares in the predefined business areas; |
| --- | --- |

(IV)

The sales process for shares in the predefined business areas;

| c) | is to monitor compliance with all other commitments, |
| --- | --- |

c)

is to monitor compliance with all other commitments,

| d) | is to assume the other functions assigned to the trustee in the commitments attached to the decision; |
| --- | --- |

d)

is to assume the other functions assigned to the trustee in the commitments attached to the decision;

| e) | is to propose measures to ÖVAG that it considers necessary to ensure that ÖVAG fulfils the commitments attached to the decision; |
| --- | --- |

e)

is to propose measures to ÖVAG that it considers necessary to ensure that ÖVAG fulfils the commitments attached to the decision;

| f) | is to submit a draft written report to the Commission, Austria and ÖVAG within thirty days after the end of each six-month period. The Commission, Austria and ÖVAG can submit comments on the draft within five working days. Within five working days of receipt of the comments, the trustee is to prepare a final report, incorporating the comments as far as possible and at its discretion, and submit it to the Commission. Only afterwards the trustee is also to send a copy of the final report to Austria and ÖVAG. If the draft report or the final report contains any information that may not be disclosed to ÖVAG, only a non-confidential version of the draft report or the final report is to be sent to ÖVAG. Under no circumstances is the trustee to submit any version of the report to Austria and/or ÖVAG before submitting it to the Commission. |
| --- | --- |

f)

is to submit a draft written report to the Commission, Austria and ÖVAG within thirty days after the end of each six-month period. The Commission, Austria and ÖVAG can submit comments on the draft within five working days. Within five working days of receipt of the comments, the trustee is to prepare a final report, incorporating the comments as far as possible and at its discretion, and submit it to the Commission. Only afterwards the trustee is also to send a copy of the final report to Austria and ÖVAG. If the draft report or the final report contains any information that may not be disclosed to ÖVAG, only a non-confidential version of the draft report or the final report is to be sent to ÖVAG. Under no circumstances is the trustee to submit any version of the report to Austria and/or ÖVAG before submitting it to the Commission.

| g) | The report is to focus on the duties set out in the mandate by the trustee and compliance with the obligations by ÖVAG, thus enabling the Commission to assess whether ÖVAG is being managed in accordance with the obligations. If necessary, the Commission may specify the scope of the report in more detail. In addition to these reports, the trustee is to report promptly in writing to the Commission if it has reason to suppose that ÖVAG is failing to comply with these obligations, sending a non-confidential version to ÖVAG at the same time. |
| --- | --- |

g)

The report is to focus on the duties set out in the mandate by the trustee and compliance with the obligations by ÖVAG, thus enabling the Commission to assess whether ÖVAG is being managed in accordance with the obligations. If necessary, the Commission may specify the scope of the report in more detail. In addition to these reports, the trustee is to report promptly in writing to the Commission if it has reason to suppose that ÖVAG is failing to comply with these obligations, sending a non-confidential version to ÖVAG at the same time.

D.   Duties and obligations of ÖVAG

| (xi) | ÖVAG is to provide and to require its advisors to provide the trustee with all such cooperation, assistance and information as the trustee may reasonably require to perform its tasks under this mandate. The trustee is to have unrestricted access to any books, records, documents, management or other personnel, facilities, sites and technical information of ÖVAG or of the business to be sold that are necessary to fulfil its duties under the mandate. ÖVAG is to make available to the trustee one or more offices at its business premises and all employees of ÖVAG are to be available for meetings with the trustee in order to provide it with all the information it needs to perform its duties. |
| --- | --- |

(xi)

| (xii) | Subject to ÖVAG’s approval (this approval may not to be unreasonably withheld or delayed) and at its expense, the trustee may appoint advisors (in particular for corporate finance or legal advice), if the trustee considers the appointment of such advisors necessary or appropriate for the performance of its duties and obligations under the mandate, provided that any costs and other expenses incurred by the trustee are reasonable. Should ÖVAG refuse to approve the advisors proposed by the trustee, the Commission may approve their appointment instead, after hearing ÖVAG’s reasons. Only the trustee is entitled to issue instructions to the advisors. |
| --- | --- |

(xii)

E.   Replacement, discharge and reappointment of the trustee

| (xiii) | If the trustee terminates its functions under the commitments or if there are any other significant grounds, such as a conflict of interest on the part of the trustee,






  a) | the Commission can, after hearing the trustee, require ÖVAG to replace it, or |
| --- | --- | --- |

(xiii)

a)

the Commission can, after hearing the trustee, require ÖVAG to replace it, or

| b) | ÖVAG, with the approval of the Commission, can replace the trustee. |
| --- | --- |

b)

ÖVAG, with the approval of the Commission, can replace the trustee.

| (xiv) | If the trustee is removed in accordance with paragraph E(xiii), it may be required to continue in its function until a new trustee is in place to whom the trustee has effected a full handover of all relevant information. The new trustee is to be appointed in accordance with the procedure referred to in paragraphs A(i) to A(vi). |
| --- | --- |

(xiv)

| (xv) | Besides removal in accordance with paragraph E(xiii), the trustee is to cease its activities only after the Commission has discharged it from its duties. This discharge is to take place when all the obligations with which the trustee has been entrusted have been implemented. However, the Commission may at any time require the reappointment of the trustee if it is subsequently found that the relevant remedies have not been fully and properly implemented. |
| --- | --- |

(xv)

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20.6.2013

| 20.6.2013 | EN | Official Journal of the European Union | L 168/s3 |
| --- | --- | --- | --- |

EN

Official Journal of the European Union

L 168/s3

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NOTICE TO READERS

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