# CE2004078EN.01055801.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/558 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/558

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(2004/C 78 E/0593)

WRITTEN QUESTION E-3472/03

by Christoph Konrad (PPE-DE) to the Commission

(21 November 2003)

Subject:   Conversion of the Landesbank Nordrhein-Westfalen into an investment bank

Subject:

| 1. | The government of the German Land of Nordrhein-Westfalen is at present drawing up a new State Bank Law, which will make it possible for the Landesbank Nordrhein-Westfalen to be converted into a bank engaged solely in investment activities. Unlike other state banks, the Landesbank Nordrhein-estfalen would then continue to benefit from the state guarantee system of Gewährträgerhaftung (statutory guarantee) and Anstaltslast (institutional liability) after 2005.
  Is the European Commission aware of these plans? What are its views on them, given that they will mean the continued provision of the guarantees which the Commission recently decided should be abolished after 2005? Does the Commission believe that its decision to abolish the guarantees has been undermined? |
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1.

The government of the German Land of Nordrhein-Westfalen is at present drawing up a new State Bank Law, which will make it possible for the Landesbank Nordrhein-Westfalen to be converted into a bank engaged solely in investment activities. Unlike other state banks, the Landesbank Nordrhein-estfalen would then continue to benefit from the state guarantee system of Gewährträgerhaftung (statutory guarantee) and Anstaltslast (institutional liability) after 2005.

Is the European Commission aware of these plans? What are its views on them, given that they will mean the continued provision of the guarantees which the Commission recently decided should be abolished after 2005? Does the Commission believe that its decision to abolish the guarantees has been undermined?

| 2. | After the law has been adopted in Nordrhein-Westfalen, how will the European Commission react to distortions of competition which might arise as a result of the more competitive refinancing options open to such an investment bank? How will it ensure that all business areas related to competition are kept separate from the bank's investment activities? |
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2.

After the law has been adopted in Nordrhein-Westfalen, how will the European Commission react to distortions of competition which might arise as a result of the more competitive refinancing options open to such an investment bank? How will it ensure that all business areas related to competition are kept separate from the bank's investment activities?

Answer given by Mr Monti on behalf of the Commission

(15 January 2004)

(15 January 2004)

| 1. | The Commission is aware that the Government of the German Land of Northrhine-Westphalia is preparing a new Landesbank-law, which intends to convert the current Landesbank into a pure public development bank. The draft law has been examined by the Commission services and — after taking into account the Commission services' comments — found to be a correct implementation of the Commission Decision of 27 March 2002 (1). This has also been the case with the other submitted German laws on public development banks to be amended in the light of this Commission decision.
  In strict compliance with Commission Decision of 27 March 2002 recommending appropriate measures to Germany regarding ‘Anstaltslast’ and ‘Gewährträgerhaftung’, this amendment will allow the new pure public development bank to keep the state guarantees for the refinancing of its public developments tasks, in particular, the fulfilment of the public promotional activities in compliance with the state aid rules of the Community.
  On the basis of the information available, the new public development bank will then be in the same position to keep state guarantees for their public tasks as about a dozen other German public development banks, including KfW. Despite its name of Landesbank (which is actually envisaged to be changed), it will not, by its very nature, pursue commercial activities. The conversion does not circumvent the Commission's Decision of 27 March 2002. The State guarantees will be abolished for all Landesbanks and savings banks performing commercial banking activities with effect from 19 July 2005. The necessary legal changes have already been implemented. |
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1.

The Commission is aware that the Government of the German Land of Northrhine-Westphalia is preparing a new Landesbank-law, which intends to convert the current Landesbank into a pure public development bank. The draft law has been examined by the Commission services and — after taking into account the Commission services' comments — found to be a correct implementation of the Commission Decision of 27 March 2002 (1). This has also been the case with the other submitted German laws on public development banks to be amended in the light of this Commission decision.

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In strict compliance with Commission Decision of 27 March 2002 recommending appropriate measures to Germany regarding ‘Anstaltslast’ and ‘Gewährträgerhaftung’, this amendment will allow the new pure public development bank to keep the state guarantees for the refinancing of its public developments tasks, in particular, the fulfilment of the public promotional activities in compliance with the state aid rules of the Community.

On the basis of the information available, the new public development bank will then be in the same position to keep state guarantees for their public tasks as about a dozen other German public development banks, including KfW. Despite its name of Landesbank (which is actually envisaged to be changed), it will not, by its very nature, pursue commercial activities. The conversion does not circumvent the Commission's Decision of 27 March 2002. The State guarantees will be abolished for all Landesbanks and savings banks performing commercial banking activities with effect from 19 July 2005. The necessary legal changes have already been implemented.

| 2. | It should be noted that most commercial activities of the former Westdeutsche Landesbank Girozentrale were already regrouped into the new limited liability bank WestLB AG created in 2002. Commercial activities currently still in existence in Landesbank have to be hived off into a separate undertaking (WestLB AG or other) without any State support. A similar split into two separate legal entities, respectively fulfilling public tasks (with State support) and commercial activities (without any State support), has for instance also to be implemented by the federal public development bank KfW.
  The new legal framework seems thus adequate to avoid distortions of competition in the future. The Commission will of course also monitor in the future whether undue advantages from State resources will be granted to commercial banking activities in an individual case and, if necessary, take appropriate action. |
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2.

It should be noted that most commercial activities of the former Westdeutsche Landesbank Girozentrale were already regrouped into the new limited liability bank WestLB AG created in 2002. Commercial activities currently still in existence in Landesbank have to be hived off into a separate undertaking (WestLB AG or other) without any State support. A similar split into two separate legal entities, respectively fulfilling public tasks (with State support) and commercial activities (without any State support), has for instance also to be implemented by the federal public development bank KfW.

The new legal framework seems thus adequate to avoid distortions of competition in the future. The Commission will of course also monitor in the future whether undue advantages from State resources will be granted to commercial banking activities in an individual case and, if necessary, take appropriate action.

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(1)  Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty — Cases where the Commission raises no objections, OJ C 150, 22.6.2002; referring to publication on the Commission's website under http:// europa.eu.int/comm/secretariat_general/sgb/state_aids/industrie/e010-00.pdf

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