**Case T-163/05**

**Bundesverband deutscher Banken eV**

**v**

**European Commission**

(State aid – Transfer of public assets to Landesbank Hessen-Thüringen Girozentrale – Decision declaring the aid to be, in part, incompatible with the common market and ordering its recovery – Private investor test – Duty to state reasons)

Summary of the Judgment

1.      *State aid – Meaning – Private investor test*

*(Art. 87(1) EC)*

2.      *State aid – Meaning – Assessment in accordance with the private investor test*

*(Art. 87(1) EC)*

3.      *State aid – Meaning – Application of the private investor test – Discretion of the Commission*

*(Art. 87(1) EC)*

4.      *State aid – Meaning – Assessment in accordance with the private investor test*

*(Art. 87(1) EC)*

5.      *State aid – Meaning – Assessment in accordance with the private investor test*

*(Art. 87(1) EC)*

1.      In order to determine whether a State measure constitutes aid, it is necessary to establish whether the recipient undertaking
receives an economic advantage which it would not have obtained under normal market conditions. In that regard, it cannot
be held that the exercise of ascertaining whether the transaction took place under normal conditions of a market economy must
necessarily be made by reference to the single investor or to the single undertaking benefiting from the investment, when
it is the interaction between the various economic operators which is precisely the feature of a market economy. Nor, furthermore,
does that exercise require the constraints connected with the nature of the asset transferred to be disregarded altogether,
since it is necessary to take into account, as a reference, the conduct of a private investor finding himself, as far as possible,
in the same situation as a public investor.

In those circumstances, the Commission is obliged, in assessing whether the undertaking enjoys an advantage which it would
not have been able to obtain under market conditions, to make a complete analysis of all factors that are relevant to the
transaction at issue and its context, including the situation of the beneficiary undertaking and of the relevant market. The
Commission can, in particular, examine whether the undertaking would have been able to procure funds entailing the same advantages
from other investors and, if necessary, under what conditions, since a measure cannot constitute State aid if it does not
place an undertaking in a more advantageous position than it would have been in if the public authority had not intervened.

(see paras 35-37, 175)

2.      A public authority which makes a capital contribution to a bank, providing for remuneration based on a phased model under
which, in the early years following the transfer of that contribution, the remuneration fixed for the expansion of the business
is paid not on the whole contribution but on tranches agreed in advance, does not necessarily confer on the bank an advantage
which it could not have obtained in any other way.

In the absence of any arguments from which it might be established that the Commission made a manifest error of assessment,
the Commission is entitled to find that, in a situation characterised, on the one hand, by the fact that a public authority
wanted to invest in a non-liquid asset and did not want to divide it and, on the other, by the fact that that bank did not,
either in the short or medium term, need capital on the scale of that of the special fund, a private investor would not have
been able to obtain from the bank immediate remuneration for the whole of the contribution at issue at the rate of remuneration
for the expansion of the bank’s competitive business. In any event, there does not appear to be a manifest error in taking
the view that a bank will not agree to pay the rate corresponding to remuneration for the expansion of its competitive business
in respect of capital which it knows in advance it will not be able to use for that purpose. While such capital may enable
the bank to strengthen its solvency or avoid its deterioration and, therefore, to reduce or maintain its financing costs,
it does not enable the bank to obtain additional income from new transactions.

Accordingly, a private investor in that public authority’s situation should have taken into account the fact that, since,
for supervisory purposes, it was impossible for the bank to use the whole of the contribution available immediately for the
expansion of its competitive business, that part of the contribution which was not available for the bank to use did not have
the same economic function for the bank as the part which was available.

(see paras 51, 58, 66-68)

3.      The assessment by the Commission of the question whether an investment secures an advantage which the undertaking would not
have been able to obtain on the market involves a complex economic appraisal. When the Commission adopts a measure involving
such an appraisal it enjoys a wide discretion, and judicial review of that measure, even though it is in principle a comprehensive
review of whether a measure falls within the scope of Article 87(1) EC, is limited to verifying whether the Commission complied
with the relevant rules governing procedure and the statement of reasons, whether the facts on which the contested finding
was based have been accurately stated and whether there has been any manifest error of assessment of those facts or a misuse
of powers. In particular, the Court is not entitled to substitute its own economic assessment for that of the author of the
decision.

Thus, the comparison of the capital contribution at issue with other hybrid instruments is a matter of some economic complexity,
over which the Commission enjoys a wide margin of assessment. In addition, the classification of the contribution at issue
as a time-limited silent partnership contribution or as share capital is merely an analytical tool used by the Commission
in applying Article 87(1) EC.

The Commission’s assessment in that regard does not therefore permit it to make an automatic determination as to the existence
and scale of State aid, but merely allows it to use for its assessment a starting point which takes into account the conditions
in which private investors have carried out transactions that are as similar as possible. The Commission’s conclusion on that
point does not relieve it of its obligation to make a complete analysis of all factors that are relevant to the transaction
at issue and its context, including the situation of the beneficiary undertaking and of the relevant market, in order to verify
whether that undertaking is receiving an economic advantage which it would not have obtained under normal market conditions.

(see paras 38, 96-98)

4.      Although subscription to the whole of a capital contribution representing 40% of the issuing bank’s own funds represents a
risk for the investor, a remuneration premium is justified only if that factor constitutes an advantage for the issuing bank
for which it is prepared to pay, or if that bank needs the funds proposed by the investor and is not in a position to obtain
them from others. By contrast, while the increase in risk for the investor stems from a decision which he has taken for his
own reasons, without being influenced by the bank’s wishes or requirements, the bank will refuse to pay a remuneration premium
and will obtain funds from other investors.

(see paras 229, 234)

5.      With regard to the classification of an investment in an undertaking as State aid, it is the existence of an advantage for
the undertaking that is decisive. It follows from this that, in a case where a public authority seeks to invest a particular
type of asset, a transaction cannot be deemed to give rise to State aid where, following negotiations between that public
authority wishing to invest and the undertaking, the terms which the latter is prepared to accept on account of the disadvantages
facing that undertaking because of the nature of the capital transferred result in a remuneration that is lower than that
agreed on the market for cash investments. In so far as those terms are not more advantageous for the undertaking than those
which it could have obtained if the transaction related, as would normally be the case, to liquid capital, it does not gain
an advantage which it would not have been able to obtain on the market. By contrast, it cannot be held that, for a transaction
of that kind not to be regarded as giving rise to State aid, the public authority must always receive the same remuneration
for its investment as an investor who is prepared to transfer liquid capital.

(see para. 277)

JUDGMENT OF THE GENERAL COURT (Fourth Chamber)

3 March 2010 (*)

(State aid – Transfer of public assets to Landesbank Hessen-Thüringen Girozentrale – Decision declaring the aid to be, in part, incompatible with the common market and ordering its recovery – Private investor test – Obligation to state the reasons on which the decision is based)

In Case T‐163/05,

**Bundesverband deutscher Banken eV,** established in Berlin (Germany), represented by H.‐J. Niemeyer, K.‐S. Scholz and J.‐O. Lenschow, lawyers,

applicant,

v

**European Commission,** represented by N. Khan and T. Scharf, acting as Agents,

defendant,

supported by

**Federal Republic of Germany,** represented by M. Lumma and C. Schulze-Bahr, acting as Agents, and by J. Witting, lawyer,

by

**Land Hessen**(Germany), represented initially by H.‐J. Freund and M. Holzhäuser, and subsequently by H.‐J. Freund and S. Lehr, lawyers,

and by

**Landesbank Hessen-Thüringen Girozentrale,** established in Frankfurt am Main (Germany), represented by H.‐J. Freund, lawyer,

interveners,

APPLICATION for annulment of Commission Decision 2006/742/EC of 20 October 2004 on aid granted by Germany [to] Landesbank
Hessen-Thüringen – Girozentrale (OJ 2006 L 307, p. 159),

THE GENERAL COURT (Fourth Chamber),

composed of O. Czúcz (Rapporteur), President, V. Vadapalas and I. Labucka, Judges,

Registrar: C. Kristensen, Administrator,

having regard to the written procedure and further to the hearing on 9 September 2008,

gives the following

**Judgment**

**Background to the dispute**

A –  *The contribution at issue*

1        The Landesbank Hessen-Thüringen Girozentrale (‘Helaba’) is one of Germany’s largest banks. Its legal status is that of a body
governed by public law. Since 1 January 2001, Helaba has been owned by the Sparkassen- und Giroverband Hessen-Thüringen with
an 85% stake, *Land*Hessen (‘the *Land*’) with a 10% stake, and the *Land* of Thuringia with a 5% stake. Helaba operates as the principal banker to the *Länder* of Hessen and Thuringia and as the central institution of the Hessen and Thuringia savings banks. It also operates as a commercial
bank both on the national and on the international markets.

2        By a law of 17 December 1998, the *Land* established a special fund called ‘Wohnungswesen und Zukunftsinvestition’ (Housing and Future Investment; ‘the special fund’).
The special fund comprises the *Land*’s claims from low-interest loans granted between 1948 and 1998 for the purpose of promoting social housing construction.
As at 31 December 1998, the loan portfolio amounted to DEM 7.829 billion (approximately EUR 4 billion). Its cash value was
determined by two independent experts at DEM 2.473 billion (EUR 1.264 billion).

3        The special fund was transferred to Helaba, under a contract (‘the contract’) between Helaba and the *Land*, as a ‘silent partnership contribution’ in the form of an internal partnership entering into force on 31 December 1998 (‘the
contribution at issue’). According to clause 1(2) of the contract, the purpose of the contribution was to serve, permanently,
as liable equity capital for Helaba, in the form of core capital. The Bundesaufsichtsamt für das Kreditwesen (Federal Banking
Supervisory Office; ‘BAKred’), in fact, recognised the entire contribution as core capital. The view was thus taken, inter
alia, that the contribution was in line with the Sydney Declaration, a press release by the Basel Committee on Banking Supervision
of 27 October 1998 stating that the share of hybrid equity capital instruments (instruments which have certain characteristics
both of shareholdings and of debt obligations) in the core capital of credit institutions may not exceed 15%, except in the
case of instruments the contractual terms of which provide that the capital is issued permanently and is not coupled with
any explicit feature – other than a pure call option by the issuer – which might lead to the instrument being redeemed.

4        The parties to the contract agreed that, in consideration for that silent partnership contribution, Helaba would pay the *Land* a remuneration of 1.4% per annum of the amount of the contribution, after deducting the part required to cover the promotion
of social housing construction. That remuneration consists of a remuneration for the liability function of 1.2% per annum
and a premium of 0.2% for the perpetuity of the contribution and Helaba’s unilateral right of notice. It was agreed, under
a phased arrangement, that this remuneration would not be payable in the first four years (1998 to 2002) on the full value
of the fund, but on the tranches rising in annual increments (‘the phased model’). The tranches were fixed at DEM 700 million,
DEM 1.2 billion, DEM 1.6 billion and DEM 2 billion (approximately EUR 380 million, EUR 610 million, EUR 820 million and EUR 1.02 billion,
respectively).

B –  *Cases concerning the German Landesbanken*

5        By letters of 31 May and 21 December 1994 the applicant, the Bundesverband deutscher Banken eV (Association of German Banks),
informed the Commission of the European Communities that a certain number of *Länder*, including the *Land* of North-Rhine Westphalia, had transferred loans for housing construction to the liable equity capital of certain Landesbanken
(regional banks), such as Westdeutsche Landesbank Girozentrale (‘WestLB’) or, if not, that they intended to do so. According
to the applicant, the parties had not agreed any remuneration consistent with the test of the private investor operating in
a market economy (‘the private investor test’) in return for these contributions, and therefore the increase in the equity
capital of the relevant Landesbanken resulting from those transactions distorted competition in favour of the recipient banks.

6        By two letters of 6 August 1997 and 30 July 1998 the applicant informed the Commission of two further transfers of assets,
including the contribution at issue.

7        Initially, the Commission examined the transfer of assets to WestLB (‘the WestLB case’), announcing that it would examine
the transfers to the other banks in the light of the outcome of that case. On 8 July 1999, the Commission adopted Decision
2000/392/EC on a measure implemented by the Federal Republic of Germany for WestLB (OJ 2000 L 150, p. 1; ‘the 1999 WestLB
decision’), by which it found that the transaction in question constituted State aid that was incompatible with the common
market, and ordered the recovery of the aid. That decision was annulled by the judgment in Joined Cases T‐228/99 and T‐233/99
*Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen*v *Commission* [2003] ECR II‐435 (‘*WestLB*’ or ‘the *WestLB* judgment’) owing to a failure to state adequate reasons.

8        By letter of 13 November 2002, the Commission informed the Federal Republic of Germany of its decision to initiate formal
investigation procedures in relation, inter alia, to the contribution at issue. The decision initiating the procedure in relation
to the contribution at issue was published in the *Official Journal of the European Union* (OJ 2003 C 72, p. 3).

C –  *The contested decision*

9        On 20 October 2004, the Commission adopted Decision 2006/742/EC on aid granted by Germany [to] Landesbank Hessen-Thüringen
– Girozentrale (OJ 2006 L 307, p. 159; ‘the contested decision’).

10      In the contested decision, the Commission took the view that, since the special fund was recognised by BAKred as core capital
of Helaba, it was appropriate – in order to examine whether the *Land*’s conduct corresponded to that of a private investor – to compare the contribution at issue with equity instruments that
were recognised as core capital in Germany in the year of the contribution and that were available to Helaba at the time of
the transfer specifically for an investment of this order of magnitude, which made up significantly more than 15% of Helaba’s
core capital. It rejected the applicant’s argument that the characteristics of the contribution at issue, as they appear in
the contract concluded between the *Land* and Helaba, were such that the contribution was more akin to share capital than to a ‘normal’ – that is to say, time-limited
– silent partnership contribution (recitals 128 to 139 to the contested decision).

11      As regards the calculation of the remuneration which a private investor would have required for a contribution such as the
contribution at issue, the Commission distinguished the amount which was available to underpin Helaba’s competitive business
from that which, for various reasons could not, in the Commission’s view, be used by Helaba for that purpose (recitals 141
and 142 to the contested decision).

12      With regard to the amount which was available to underpin Helaba’s competitive business, in the first place, the Commission
took the view that it was necessary to take into account the fact that Helaba was required to pay tax on industrial and commercial
operations (‘trade tax’), which has to be paid by industrial and commercial investors conducting business in Germany, but
which, in the present case, had to be paid by Helaba because the *Land*was not obliged to do so (recitals 157 to 159 to the contested decision).

13      In the second place, the Commission explains that, on the market, the rate used as a reference for the calculation of the
remuneration is either fixed, corresponding generally to the yield on public bonds with a 10-year maturity, or variable, corresponding
to the interbank market rates, such as the Libor or Euribor rates. The Commission states that a remuneration premium is added,
irrespective of the type of reference rate used, the composition of which varies according to whether the remuneration is
variable or fixed. It explains that, if the remuneration is variable, the remuneration premium corresponds to the liability
remuneration for the silent partnership in question (‘the liability remuneration’). However, if the remuneration is fixed,
the remuneration premium comprises two elements: the refinancing premium, that is to say the premium on the yield on public
bonds which the bank has to pay on the market to procure liquidity, and the liability remuneration corresponding to the risk
profile of the silent partnership contribution in question (recital 162 to the contested decision).

14      Given that the contribution at issue does not entail a transfer of liquid capital or involve additional refinancing costs
for Helaba, the Commission takes the view that Helaba has to pay only a liability remuneration to the *Land* (recitals 162, 184 to 187 to the contested decision).

15      Therefore, as regards the issue whether the agreed remuneration, together with the increase on account of the trade tax effect,
is in line with market conditions, the Commission took the view that, since the remuneration was in the upper part of the
market range for liability remuneration, it did not see any evidence of favourable treatment of Helaba and hence of State
aid (recitals 172 and 183 to the contested decision).

16      As regards the amount which, according to the Commission, was not available to underpin Helaba’s competitive business because
it had to be used to cover the business of the special fund of promoting social housing construction or by reason of the phased
model, the Commission took the view that its entry in Helaba’s balance sheet from the time of the transfer represented an
advantage for Helaba in so far as it operated as a guarantee which had to be paid for, contrary to what was envisaged by the
parties, at a rate of 0.3% per annum before tax. The Commission therefore deemed Helaba to have received EUR 6.09 million
in State aid (recitals 155 and 190 to the contested decision).

**Procedure and forms of order sought by the parties**

17      By application lodged at the Registry of the Court on 18 April 2005, the applicant brought the present action.

18      By documents lodged at the Registry of the Court on 29 July, 4 and 8 August 2005 respectively, Helaba, the Federal Republic
of Germany and the *Land* applied for leave to intervene in the present proceedings in support of the Commission. By order of 30 September 2005, the
President of the Third Chamber of the Court granted them leave to intervene.

19      By letters of 9 and 23 August 2005 and 15 December 2005 the applicant applied for certain confidential information contained
in the application and in the reply to be excluded from the copies to be sent to the interveners. It produced a non-confidential
version of those pleadings. The interveners were sent only the non-confidential versions of those pleadings and raised no
objection in that regard.

20      By a letter of 20 December 2005 the applicant informed the Court that it had not named the banks which had provided it with
certain information included in the reply because the banks feared that their commercial relationships with Helaba would be
seriously damaged if their identity were to become known to Helaba. It explained that this information would be provided to
the Court alone at the Court’s request.

21      The interveners lodged their statements within the prescribed period. The applicant, in turn, lodged its observations on the
statements in intervention within the prescribed period. The Commission declined to submit observations on those statements.

22      By letter of 28 March 2006 the Commission requested the Court to remove from the file certain annexes to the reply. Since
the applicant had no objection to that request in relation to Annex C.3 to the reply, Annex C.3 was removed from the file
by decision of the President of the Third Chamber of 28 June 2006. The decision concerning the other annexes which the Commission
had applied to have removed was reserved.

23      Owing to a change in the composition of the chambers of the Court, the Judge-Rapporteur was assigned to the Fourth Chamber
to which, in consequence, the present case was assigned.

24      In view of the end of the term of office of one of the members of the Chamber, the President of the Court designated another
Judge to complete the Chamber, in accordance with Article 32(3) of the Rules of Procedure of the Court.

25      Upon hearing the Judge-Rapporteur, the Court (Fourth Chamber) decided to open the oral procedure and, in the context of the
measures of organisation of procedure provided for in Article 64 of the Rules of Procedure, requested the Commission to lodge
certain documents and put questions in writing to the parties, to which they replied within the prescribed period.

26      The parties presented oral argument and their answers to the questions put by the Court at the hearing on 9 September 2008.
At the end of that hearing, the Commission was authorised to reply in writing to one of the questions put by the Court. The
Commission replied by letter of 19 September 2008 and, on 2 October 2008, the applicant lodged its observations on that reply.
The oral procedure was closed on 8 October 2008.

27      The applicant claims that the Court should:

–        annul the contested decision;

–        order the Commission to pay the costs.

28      The Commission, supported by the interveners, contends that the Court should:

–        declare the action inadmissible and, in the alternative, dismiss it as unfounded;

–        order the applicant to pay the costs.

**Law**

A –  *Admissibility*

29      The Commission contends that the action is likely to be inadmissible in so far as the applicant is not individually concerned
by the contested decision.

30      It must be noted that the Court is entitled to assess, according to the circumstances of each case, whether the proper administration
of justice justifies the dismissal of the action on the merits without first ruling on the objection of inadmissibility raised
by the defendant (Case C‐23/00 P *Council* v *Boehringer* [2002] ECR I‐1873, paragraphs 51 and 52, and judgment of 13 September 2006 in Joined Cases T‐217/99, T‐321/00 and T‐222/01
*Sinaga* v *Commission*, not published in the ECR, paragraph 68).

31      It must be observed in this instance that, while the present case and the case giving rise to the judgment of the Court of
today’s date in Case T‐36/06 *Bundesverband deutscher Banken* v *Commission* [2010] ECR II‐0000 raise slightly different issues of admissibility on account of the legal basis of each of the contested
decisions, they raise issues of substance that are essentially similar, since, in the case giving rise to the aforementioned
judgment of today’s date, the parties repeat many of the arguments that were put forward in the present proceedings. Consequently,
the Court considers it necessary to begin by adjudicating on the pleas put forward by the applicant, without first ruling
on the plea of inadmissibility raised by the Commission, since the action for annulment is, in any event, unfounded on the
grounds set out below.

B –  *Substance*

32      The applicant submits that the contested decision is contrary to Article 87(1) EC inasmuch as the remuneration agreed between
the *Land* and Helaba in respect of the part of the contribution which the latter could use to underpin its competitive business is
not consistent with what a private investor would have required at the time of the transaction, and the *Land*’s willingness to forgo an appropriate remuneration constitutes State aid. It submits, moreover, that the reasons stated in
respect of some of the findings in the contested decision are inadequate.

33      Specifically, the applicant submits, first of all, that the Commission did not take into account the market situation at the
time when the contribution at issue was made. It goes on to criticise the Commission’s findings in relation to each of the
steps taken to reach the conclusion that the remuneration agreed in respect of the part of the contribution at issue that
could be used to underpin Helaba’s competitive business does not constitute State aid. In the first place, it takes issue
with the Commission’s view that, for the purposes of a comparison of the remuneration agreed in respect of the contribution
at issue with remuneration for other transactions that took place on the market, the contribution at issue had more in common
with a time-limited silent partnership contribution than with share capital. In the second place, it objects to the Commission’s
acceptance of the solution involving a phased remuneration for that part of the contribution at issue which could be used
to underpin Helaba’s competitive business, in accordance with the phased model. In the third place, it objects to the Commission’s
findings in respect of possible premiums and deductions which might be applied to the market range of liability remuneration
to take account of the specific nature of the contribution at issue. In the fourth place, it objects to the Commission’s deduction
from the remuneration that would be required on the market of the refinancing costs associated, as far as Helaba is concerned,
with the purported lack of liquidity of the contribution.

34      It must be borne in mind at the outset that the aim of Article 87(1) EC is to prevent trade between Member States from being
affected by advantages granted by public authorities which, in various forms, distort or threaten to distort competition by
favouring certain undertakings or certain products.

35      In order to determine whether a State measure constitutes aid, it is therefore necessary to establish whether the recipient
undertaking receives an economic advantage which it would not have obtained under normal market conditions (Case C‐39/94 *SFEI and Others* [1996] ECR I‐3547, paragraph 60, *WestLB*, cited in paragraph 7 above, paragraphs 207 and 243).

36      In that regard, it cannot be held that the exercise of ascertaining whether the transaction took place under normal conditions
of a market economy must necessarily be made by reference to the single investor or to the single undertaking benefiting from
the investment, when it is the interaction between the various economic operators which is precisely the feature of a market
economy (*WestLB*, cited in paragraph 7 above, paragraph 327). Nor, furthermore, does that exercise require the constraints connected with
the nature of the asset transferred to be disregarded altogether, since it is necessary to take into account, as a reference,
the conduct of a private investor finding himself, as far as possible, in the same situation as a public investor (see, to
that effect, Case C‐482/99 *France* v *Commission* [2002] ECR I‐4397, paragraph 70; Case C‐334/99 *Germany*v *Commission*[2003] ECR I‐1139, paragraph 133; and *WestLB*, cited in paragraph 7 above, paragraph 270).

37      In those circumstances, the Commission is obliged, in assessing whether the undertaking enjoys an advantage which it would
not have been able to obtain under market conditions, to make a complete analysis of all factors that are relevant to the
transaction at issue and its context, including the situation of the beneficiary undertaking and of the relevant market (*WestLB*, cited in paragraph 7 above, paragraph 251). The Commission can, in particular, examine whether, in a case such as this one,
the undertaking would have been able to procure funds entailing the same advantages from other investors and, if necessary,
under what conditions, since a measure cannot constitute State aid if it does not place an undertaking in a more advantageous
position than it would have been in if the public authority had not intervened.

38      Lastly it must be borne in mind that the assessment by the Commission of the question whether an investment secures an advantage
which the undertaking would not have been able to obtain on the market involves a complex economic appraisal. When the Commission
adopts a measure involving such an appraisal it enjoys a wide discretion, and judicial review of that measure, even though
it is in principle a comprehensive review of whether a measure falls within the scope of Article 87(1) EC, is limited to verifying
whether the Commission complied with the relevant rules governing procedure and the statement of reasons, whether the facts
on which the contested finding was based have been accurately stated and whether there has been any manifest error of assessment
of those facts or a misuse of powers. In particular, the Court is not entitled to substitute its own economic assessment for
that of the author of the decision (Joined Cases T‐126/96 and T‐127/96 *BFM and EFIM* v *Commission* [1998] ECR II‐3437, paragraph 81; Case T‐296/97 *Alitalia* v *Commission* [2000] ECR II‐3871, paragraph 105; and *WestLB*, cited in paragraph 7 above, paragraph 282).

39      Before examining the applicant’s various objections to the contested decision, it is appropriate to analyse the parties’ arguments
in relation to the context in which the contribution at issue was negotiated.

1.     *Context in which the contribution at issue was negotiated*

40      The applicant submits that it is wrong to take the view that Helaba did not need a core capital contribution and that the
contribution was made essentially in the interests of the Federal Republic of Germany, in particular of the *Land*.

41      The Commission, supported by the *Land* and Helaba, rejects that presentation of the context of the case.

42      So far as Helaba’s situation is concerned, it must be noted that, before the transfer of the contribution at issue, Helaba
had a core capital ratio of 5.4% and an equity ratio of 9.6%, both higher than the minimum ratios set by law, namely 4% and
8% respectively (recitals 28 and 32 to the contested decision). Unlike in the WestLB case, to which the applicant refers several
times, there was no amendment of the applicable rules that made an increase in the equity ratios of European banks essential
in 1998. The fact that Helaba’s ratios were less favourable than those of the major German private banks does not mean that
the contribution at issue was essential for Helaba’s survival or for Helaba to be able to maintain its volume of business,
since it cannot be the case that all German banks not having the ratios of the major private banks need an injection of capital.
In any event, the applicant did not provide details of the ratios of the major private banks for 1998, only for the period
from 1984 to 1994.

43      In those circumstances, it must be held that Helaba needed only such new funds as were necessary in order to attain the growth
targets laid down in its business plan. Aside from the fact that any failure to obtain the funds needed for that purpose would
have had the effect merely of impeding its growth and would have compromised neither its survival nor its volume of business
at that time, the growth targets fixed in Helaba’s business plan required – according to the observations of the Federal Republic
of Germany set out in recital 54 to the contested decision – only a substantially smaller increase in core capital than the
amount of the contribution at issue, indeed of the tranches provided for by the phased model.

44      That finding is not affected by the statements of the Chairman of Helaba’s Board of Managing Directors which were published
in the German press in 1998 and to which the applicant referred. Helaba’s dependence on the contribution at issue cannot in
any way be inferred from the Chairman’s statement that ‘[i]f international developments permit it, [Helaba] would very much
like [the special fund] to be made available to [it] as equity capital in return for a market remuneration’. Similarly, an
urgent need for equity capital cannot be inferred from his assertion that, ‘in the long term at least, consideration [had
to] be given to Helaba’s capital adequacy’.

45      Those statements do indeed show that Helaba was an interested party as regards the contribution at issue, and that the contribution
was required to put Helaba in the position of being able to cover its capital needs over a number of years and increase its
risk-bearing transactions. It is, in fact, only because Helaba was expecting to benefit that it suggested taking on the special
fund in the form of a silent partnership contribution. However, that does not mean that it was dependent on the contribution
at issue or that it could not have increased its core capital by calling on private investors.

46      As far as the situation of the *Land* is concerned, it is apparent from the contested decision and from the documents in the case that it wanted to generate additional
income by using the social housing promotion portfolio for other purposes, that it nevertheless did not want to sell it so
as to be able to continue to use it for promotion activities, that it did not wish to divide it between several institutions
– owing, on the one hand, to the fact that, as a revolving fund, it has to be refinanced by returns on loans granted and,
on the other, to the ensuing costs and loss of flexibility in administering the aid – and that it wanted to organise the administration
of the assets as effectively and cheaply as possible (recital 20 to the contested decision).

47      Helaba declared that it was prepared to take on and manage the whole aid portfolio of the special fund. The fact that Helaba
was already managing funds and aid programmes and that, since it was a bank governed by public law, the *Land* had a supervisory role and was better equipped to monitor its solvency and its development, inter alia, persuaded the *Land*that Helaba was the appropriate partner. The cooperative banks had, admittedly, spontaneously shown their interest in the
special fund, but they wanted the *Land* to sell it. Furthermore, in spite of the allegedly very modest remuneration agreed for the contribution at issue and the
fact that the *Land*’s intention to transfer the funds had been made public, the applicant having become aware of it by summer 1998 at the latest,
the major private banks, unlike the cooperative banks, did not make rival offers.

48      It is, therefore, against that background that the Court must consider the parties’ arguments and determine whether the Commission
made a manifest error of assessment in taking the view, in essence, that the financial burden on Helaba associated with the
part of the special fund that it could use to underpin its competitive business was not less than Helaba would have borne
under normal market conditions to obtain the same advantages, and that, in consequence, the contribution at issue did not
involve State aid.

49      Given that one of the applicant’s arguments concerning the allegedly erroneous classification of the contribution at issue
as a silent partnership contribution and the allegedly modest level of remuneration relates to the very high volume of the
contribution, and the Commission counters that argument on the basis of the phased model, it is this issue that must be examined
first of all.

2.     *Taking the phased model into account*

a)     The contested decision

50      As indicated in paragraph 11 above, the Commission took the view that the remuneration for the part of the contribution at
issue which was available to underpin Helaba’s competitive business should be distinguished from the part which, for various
reasons, was not.

51      With regard to the determination of the part of the contribution at issue which was available to underpin Helaba’s competitive
business, the Commission accepted that it should take into account the phased model agreed between the parties, under which,
in the first four years following the transfer of the contribution at issue, the 1.4% remuneration fixed in the contract was
paid not on the whole contribution – with the exception of the part required to cover the promotion of social housing construction
– but on tranches agreed in advance. The Commission justified its acceptance of the phased model by stating that, although
the funds were *de facto* usable by Helaba from the outset, Helaba had indicated that it only needed the assets in stages in order to underpin its
competitive business and, moreover, that, within the agreed tranches, it was the actual usability or non-usability that was
taken into consideration. The Commission took the view that a private investor in the situation of the *Land* who did not wish to divide up the special fund would not have been in a position to impose any faster increase in the capital
base to be remunerated at the agreed rate of 1.4% (recitals 143 to 146 to the contested decision). The Commission took the
view, however, that the remainder of the contribution at issue over and above the agreed tranches was required to be remunerated
at a rate of 0.3% (recitals 142, 191 and 192 to the contested decision).

b)     Arguments of the parties

52      The applicant submits that the Commission made a manifest error of assessment when it took the view that the phased model
satisfies the private investor test. It maintains that, as the Commission itself recognised, the question whether the issuer
actually uses the full amount to underpin its competitive business is irrelevant to the investor, since what counts for the
investor is the fact that he has made his assets available to the bank, thereby forgoing their use and risking their loss.

53      The applicant takes the view that the reasons put forward by the Commission for nevertheless accepting the phased model are
erroneous.

54      As regards the fact that Helaba had informed the *Land* that it would not use the entire contribution at issue straightaway, the applicant claims that, while Helaba’s conduct in
demanding the phased model may have been reasonable from an economic point of view, the same cannot be said for the *Land*, since a private investor in those circumstances would not have forgone part of his remuneration but would have sought other
investment opportunities enabling him to maximise his profits, or at least would have transferred the special fund in stages
in accordance with Helaba’s requirements. At the hearing, the applicant nevertheless stated in reply to a question put by
the Court that it was not a question in this instance of whether the *Land* had to transfer its special fund in stages or try to place it elsewhere, but whether it ought not to have required remuneration
for the full funds transferred.

55      The applicant states that, contrary to what is claimed by the Commission, the Commission departed from the practice which
it had followed in the cases concerning the other Landesbanken. Thus, it claims that the Commission maintained in the defence
which it submitted in the proceedings giving rise to the *WestLB* judgment, cited in paragraph 7 above, that no private investor would make capital available to an undertaking and agree to
be remunerated only in part on the ground that the amount in question actually exceeded the undertaking’s real requirements.

56      As regards the fact that the remuneration had to be paid on the basis of tranches agreed between the parties, irrespective
of whether or not Helaba had used the full amounts, it submits that the contract did not include a clause prohibiting Helaba
from using the contribution at issue for the expansion of its business beyond the reference amounts. It takes the view, therefore,
that the establishment of those reference amounts did not constitute an advantage for the *Land* since it was possible to envisage Helaba using a larger amount for liability purposes. The applicant takes the view, moreover,
that a private investor would have required remuneration for the advantage in terms of Helaba’s rating on account of the increase
in its core capital.

57      The Commission, supported by the *Land* and Helaba, opposes those arguments.

c)     Findings of the Court

58      It must be held, first of all, that, as the applicant itself conceded at the hearing, the question as to what alternative
investment opportunities might have been of interest to the *Land* is irrelevant in the present case. It is not a question of determining whether the *Land* could have obtained a better return on its special fund by investing it differently or in another undertaking, but whether,
by investing that special fund in Helaba under the agreed conditions, the *Land* conferred an advantage on Helaba which it could not have obtained in any other way.

59      Next, it must be noted that the parties agree that a private investor who makes his capital available to a bank as that bank’s
core capital, and thereby forgoes the use of it and exposes himself to the risk of losing it, will require remuneration for
the whole of the capital transferred. The Commission thus took the view in the contested decision that the whole of the contribution
at issue had to be remunerated from the very first day of its transfer to Helaba, since it was from that point on that the
*Land* risked losing it and Helaba was able to enjoy its benefits (recitals 142, 155, 191 and 192 to the contested decision).

60      The Commission took the view, however, that a private investor would have agreed to two different rates of remuneration, according
to the purpose served by each part of the contribution at issue (recitals 142, 143 and 191 to 193 to the contested decision).
It thus decided that a private investor would, on the one hand, have accepted the remuneration agreed by the *Land* and Helaba for that part of the contribution at issue that was available for Helaba’s use in expanding its competitive business
and would, on the other, have required a remuneration of 0.3% for the remainder of the contribution at issue on account, inter
alia, of the rating advantage to Helaba entailed in its being entered from the outset as core capital. Given that the *Land* had not required remuneration for that part of the contribution at issue which was not likely to be used for the expansion
of Helaba’s competitive business, the Commission found, in respect of the period from 31 December 1998 to 31 December 2003,
that State aid had been granted in the amount of EUR 6.09 million and ordered its recovery by the Federal Republic of Germany.

61      The applicant objects to the Commission’s assessment that, in the circumstances of the present case, a private investor would
have accepted the phased model and consequently that, in the early years, a part of the funds which, for supervisory purposes,
was available for use in underpinning Helaba’s competitive business – namely the part of the contribution at issue exceeding
the tranches of the phased model and not needed to underpin the promotion of social housing construction – would not be remunerated
at the same rate as the rest of those funds.

62      In the first place, the applicant submits that, as the Commission itself admits in the contested decision and stated in the
WestLB case, a private investor would not accept that his return should depend on the amount of equity capital actually used.

63      It must be held in that regard that the basis for the remuneration agreed between the parties did not, even in the early years
following the contribution at issue, depend on the amount of the contribution that was actually used. It is apparent from
the contested decision that Helaba was required to remunerate the *Land* for the agreed tranches in full, irrespective of their actual use for the purposes of expanding its competitive business.
At the end of the period in which the phased model applied, that is to say from 2003, the remuneration agreed between the
parties was required to be paid on the whole of the contribution at issue, with the exception of the part required to underpin
the promotion of social housing construction, irrespective of the amount actually used by Helaba to underpin its competitive
business. The contested decision is therefore consistent with the principle relied on by the applicant, that a private investor
would not accept that his return should depend on the amount of equity capital actually used.

64      In the second place, the applicant states that the Commission’s differentiation – in drawing a distinction as to whether the
capital is, as in the present case, not supposed to be used for business expansion purposes because the bank announced beforehand
that it was not needed and would not be used, or can be used freely – is irrelevant to the investor since, in both cases,
he no longer has the capital. It maintains that, in any event, the agreement reached between the *Land* and Helaba does not protect the *Land*, because it does not include any undertaking by Helaba to use the funds transferred only up to the amount of the agreed tranches.

65      As regards the applicant’s assertion that it is irrelevant to the investor that Helaba had announced that it did not immediately
need all the capital, it should be borne in mind that, according to the case-law (see paragraph 36 above), whether a transaction
is in line with market conditions cannot be assessed from the point of view of the single investor but must be assessed taking
into account the interaction between the various economic operators and the context in which the transaction took place.

66      In that respect, the applicant does not put forward any arguments from which it might be concluded that the Commission made
a manifest error of assessment in finding that, in a situation such as that of the present case, characterised, on the one
hand, by the fact that the *Land* wanted to invest in a non-liquid asset and did not want to divide it and, on the other, by the fact that Helaba did not,
either in the short or medium term, need capital on the scale of that of the special fund, a private investor would not have
been able to obtain from the bank immediate remuneration for the whole of the contribution at issue at the rate of remuneration
for the expansion of the bank’s competitive business. On the contrary, the applicant itself states that Helaba probably behaved
reasonably by requiring the phased model to be applied.

67      In any event, there does not appear to be a manifest error in taking the view that a bank will not agree to pay the rate corresponding
to remuneration for the expansion of its competitive business in respect of capital which it knows in advance it will not
be able to use for that purpose. While such capital may, as the Commission states, enable the bank to strengthen its solvency
or avoid its deterioration and, therefore, to reduce or maintain its financing costs, it does not enable the bank to obtain
additional income from new transactions.

68      Accordingly, in the circumstances of the present case, a private investor in the *Land*’s situation should have taken into account the fact that, since, for supervisory purposes, it was impossible for Helaba to
use the whole of the contribution available immediately for the expansion of its competitive business, that part of the contribution
which was not available for Helaba to use did not have the same economic function for Helaba as the part which was available.

69      It is true that this aspect did not justify the *Land* forgoing receipt of any remuneration at all for the capital which was not available for Helaba to use and which was nevertheless
transferred to Helaba in order to avoid any division of the special fund. Since that capital served from the outset to guarantee
Helaba’s debts, it was subject to a certain risk of loss from that moment on, and gave Helaba an advantage in terms of rating
and reputation. It is precisely in order to ensure remuneration of the risk taken on by the *Land* and of the advantage to Helaba that the Commission imposed the payment of a remuneration of 0.3% per annum for that part
of the contribution at issue.

70      As to the fact that the contract does not include a clause by which Helaba undertakes not to use amounts in excess of the
agreed tranches for the expansion of its competitive business, it must be held that this does not render manifestly erroneous
the Commission’s assessment that the part of the contribution at issue above those tranches did not have a business expansion
function. It must be noted that the *Land* managed to ensure that the tranches were fixed at a much higher level than would have been necessary given Helaba’s capital
requirements according to its business plan, thereby ensuring that the tranches would not be exceeded. It follows from the
observations of the Federal Republic of Germany, set out in recital 54 to the contested decision and confirmed by the applicant
and Helaba in their written pleadings, that the tranches were fixed at approximately EUR 384 million (1999), EUR 614 million
(2000), EUR 818 million (2001) and EUR 1.02 billion (2002), whereas, on the basis of planned annual growth, the bank needed
approximately EUR 150 million per annum.

71      Finally, it must be observed that the applicant, which focuses on the situation of the *Land* as investor, does not explain how the solution adopted by the Commission – acceptance of the phased model and the imposition
of 0.3% remuneration for the part of the contribution above the agreed tranches – entailed a competitive advantage for Helaba
which it would not have been able to obtain under market conditions.

72      Therefore, the Commission did not make a manifest error of assessment in taking the view that, in the circumstances of the
present case, the fact that, between 1999 and 2002, Helaba did not pay a remuneration at a level appropriate to a business
expansion function for that part of the capital which, while perfectly usable – from a supervisory point of view – for the
underpinning of its competitive business, would not be used for the purpose, did not give rise to an advantage which Helaba
would not have been able to obtain under market conditions.

73      That conclusion is unaffected by the applicant’s argument that the Commission’s acceptance of the phased model in the present
case represents a departure from its earlier practice, in particular from the position which it defended in the judicial proceedings
concerning the 1999 WestLB decision. It must be noted that the Court annulled that decision in the *WestLB* judgment, cited in paragraph 7 above, and that the decision adopted by the Commission following that annulment – Decision
2006/737/EC of 20 October 2004 on aid from Germany for Westdeutsche Landesbank – Girozentrale (WestLB), now WestLB AG (OJ
2006 L 307, p. 22; ‘the 2004 WestLB decision’) – no longer imposes the remuneration rate premium which the Commission had
sought to justify on the basis of the argument invoked by the applicant. In any event, it cannot be held that the Commission
accepted that the *Land* would be only partly remunerated for that part of the contribution at issue which, from a supervisory point of view, could
be used for the expansion of Helaba’s competitive business. The Commission essentially took the view that, following the compromise
resulting in the phased model, the *Land* did not let the use of the funds transferred be determined by Helaba’s commercial judgment and that, given the imposition
of a 0.3% remuneration for that part of the contribution at issue exceeding the agreed tranches, it was not a partial remuneration
that the *Land*received but a remuneration appropriate to each part of the contribution according to its function for Helaba.

74      It follows from the foregoing that the present complaint must be rejected.

3.     *The complaint that the Commission incorrectly classified the contribution at issue as a ‘normal’ silent partnership contribution
instead of as an investment in share capital*

a)     The contested decision

75      The Commission summarises the arguments put to it, stating that, according to the applicant, ‘the only legal form properly
available to Helaba ... was that of share capital’ and that, as a result, the contribution at issue represented ‘a formal abuse
of a “normal” silent partnership’. The Commission also states that, according to the applicant, in economic terms, the contribution
at issue had so many points in common with share capital that an investor would have insisted on the payment of interest corresponding
to the remuneration of share capital. Nevertheless, according to the Federal Republic of Germany, ‘another legal form available
was that of a silent partnership contribution of unlimited duration’ (‘perpetual’) (recitals 127 and 128 to the contested
decision).

76      In the first place, the Commission notes that the silent partnership contribution was expressly established as such by the
*Land* and Helaba and accepted as such by the competent German authorities (recital 129 to the contested decision).

77      In the second place, the Commission states that, with regard to a risk analysis, the contribution at issue is more akin to
a ‘normal’ silent partnership, that is to say time-limited, than to share capital. It regards as essential in that respect
the fact that, as the Federal Republic of Germany explained in reliance on an expert’s report, in insolvency proceedings,
the contribution at issue would, like other ‘normal’ silent partnerships, have to be repaid before share capital. It adds
that, so long as the undertaking is not making a loss, both the *Land* and the investor of a time-limited silent partnership receive the entire agreed remuneration, whereas the investor in share
capital can claim only payment of a dividend that is in proportion to profits (recitals 130 to 132 to the contested decision).

78      In the third place, the Commission explains why it considers that the arguments put forward by the applicant during the administrative
procedure do not suffice to invalidate that conclusion.

79      Thus, first of all, the Commission rejects the applicant’s argument that the contribution at issue should be compared – just
as it was in the WestLB case – to a share capital investment on account of its volume, which resulted in the long term in
an increase of almost 50% in Helaba’s core capital. It states in that regard that Helaba could easily have covered its estimated
capital requirement in the period from 1998 to 2002 by taking up, at intervals, several smaller silent partnership contributions
from a number of different institutional investors (recital 133 to the contested decision).

80      Second, the Commission rejects the applicant’s argument that, as a result of the contribution at issue, the proportion of
share capital in Helaba’s total core capital (‘the share capital buffer’) did not exceed 50%, whereas that of private credit
institutions was more than 80%. The Commission took the view that this did not mean that a private investor would not have
made the contribution at issue, since the Federal Republic of Germany had shown that the regional banks generally made greater
use of silent partnership contributions beyond the 15% limit, including from private investors (recital 134 to the contested
decision).

81      Third, as regards the consequences in terms of the level of risk of the perpetuity of the contribution at issue, the Commission
rejects the applicant’s arguments that institutional investors are only prepared to acquire hybrid equity capital instruments
of fixed duration or instruments for which repayment can be assumed, because the payout rate rises incrementally. In its view,
the perpetuity of the contribution primarily entails a risk to the investor of not being able to profit from interest rate
increases on the market, but has no effect on the risk of loss. The Commission concludes from this that the perpetuity of
the contribution at issue does not in this instance justify that contribution being compared – for the purposes of a review
of the appropriate level of the agreed remuneration – to remuneration for share capital, instead of to remuneration for silent
partnership contributions (recitals 136 and 138 to the contested decision).

82      The Commission concludes from this that the *Land*’s transfer of the special fund ‘was undoubtedly made in the legal form of a silent partnership that has much more in common
with other silent partnerships than with share capital’. It states in that regard that ‘[t]here is, therefore, in [its] view,
not sufficient evidence of an abuse of the legal form of a silent partnership for a contribution of capital that in actual
economic terms constituted share capital’. It concludes that ‘[t]he basis for the remuneration of [the contribution at issue]
is, therefore, “normal”, i.e. time-limited silent partnership assets typical in size of those observable on the market, on
whose remuneration a premium may possibly have to be charged’ (recital 139 to the contested decision).

b)     Arguments of the parties

83      The applicant submits that the contribution at issue should not have been classified as a ‘normal’ silent partnership contribution
and, therefore, that its remuneration should not have been compared to that of time-limited silent partnership contributions
issued on the market.

84      It emphasises that the Commission considered whether the parties had improperly classified the contribution at issue as a
silent partnership, rather than share capital, and only examined the economic characteristics of the contribution at issue
as a secondary point. It states that this reasoning is erroneous and that it is not a question, in the present case, of whether
that was impropriety but of considering whether, from an economic point of view, the contribution at issue had more in common
with other silent partnership contributions on the market or with investments in share capital.

85      The applicant takes the view that, contrary to the Commission’s conclusion, the contribution at issue differs in legal and
economic respects from the company law model of a silent partnership or from time-limited silent partnerships issued on the
market and recognised as core capital, and has a special structure which precludes any comparison with the silent partnerships
selected by the Commission for that purpose. It takes the view, furthermore, that the Commission did not make its assessment
on the basis of the situation as it was at the time the contribution at issue was made and, moreover, that its assessment
of the market situation at that time was poor.

86      As regards, in the first place, the specific legal features of the contribution at issue, the applicant submits that, in terms
of form, the contribution is not a ‘normal’ silent partnership within the meaning of German company law, inter alia, because
it was devised to satisfy the conditions laid down by law and by the Sydney Declaration so as to enable it to be regarded
as part of Helaba’s core capital, albeit above the 15% limit.

87      As regards, in the second place, the special economic features of the contribution at issue, the applicant mentions five factors
which render the risk profile of the contribution at issue more akin to that of share capital than of time-limited silent
partnerships: its size, its guarantee status, its profitability profile, the protection of capital invested and its duration
and the impossibility of withdrawal.

88      As regards, in the third place, the market situation at the time when the contribution was made, the applicant submits that
the Commission infringed the private investor test by selecting the wrong reference period. It thus maintains that the Commission
based its conclusion that the contribution at issue had to be compared with time-limited silent partnerships on information
about private bank practices during the period after the date of the contribution at issue.

89      In addition, the applicant challenges the Commission’s assertions that, at the time of the contribution at issue, there was
an established market in Germany in hybrid equity capital instruments and, moreover, that Helaba could equally have satisfied
its capital requirements by issuing the silent contribution in several smaller tranches. It argues, in particular, that it
is not a question of what Helaba could have done to obtain funds, but whether a private investor would have granted it a contribution
that was similar and on the same terms as the contribution at issue.

90      The Commission and the interveners oppose those arguments.

c)     Findings of the Court

91      As a preliminary point, it is necessary to clarify the parties’ position regarding the significance to the outcome of the
present dispute of the legal form chosen by Helaba and the *Land* for the contribution at issue.

92      It follows from the contested decision, in particular from recitals 127, 128 and 139 thereto (see paragraphs 75 and 82 above),
that the Commission interpreted the arguments put forward by the applicant during the administrative procedure as being aimed
at eliciting a declaration that the legal form of the silent partnership was abused.

93      In its application, the applicant challenges that interpretation and submits that it has never claimed that the contribution
at issue was, in legal terms, share capital. It maintains that it claimed during the administrative procedure that, by the
particular way in which it was set up, the contribution at issue differed considerably, economically, from a silent partnership
and that it had far more in common with share capital, with the result that a private investor would have required a remuneration
appropriate to the risk profile of share capital in return for that contribution. In addition, it examines the legal characteristics
of the contribution at issue and submits that the Commission’s assertion that the contribution at issue is comparable to ‘normal’
silent partnership contributions does not stand up to in-depth analysis of the legal structure of the contribution, and that
it has significant special features in comparison with a ‘normal’ silent partnership contribution corresponding to the company
law model.

94      It nevertheless follows from the parties’ written statements as a whole that the question whether or not the Commission correctly
interpreted the arguments put forward by the applicant during the administrative procedure is not the real subject-matter
of the present dispute. It is clear from the parties’ arguments that they agree that the contribution at issue was described
in legal terms by the *Land* and by Helaba as a silent partnership contribution and recognised as such by the German authorities. They also agree that
the particular features of the contribution at issue did not prevent the *Land* or Helaba from using the legal form of a silent partnership contribution.

95      The parties’ arguments in respect of the classification of the contribution at issue, for the purposes of determining the
reference transactions, therefore concentrate on whether that contribution displays such similarities – in terms of risk profile
– with share capital that a private investor would have required remuneration appropriate to that of share capital, or whether
it is more akin to silent partnership contributions which are time-limited and recognised as core capital, so that its remuneration
could be compared to that of such silent contributions.

96      In that regard, it must be noted that the comparison of the contribution at issue with other hybrid instruments is a matter
of some economic complexity, over which the Commission enjoys a wide margin of assessment (*WestLB*, cited in paragraph 7 above, paragraph 351).

97      In addition, the classification of the contribution at issue as a time-limited silent partnership contribution or as share
capital is merely an analytical tool used by the Commission in applying Article 87(1) EC (see, to that effect, *WestLB*, cited in paragraph 7 above, paragraph 250).

98      The Commission’s assessment in that regard does not therefore permit it to make an automatic determination as to the existence
and scale of State aid, but merely allows it to use for its assessment a starting point which takes into account the conditions
in which private investors have carried out transactions that are as similar as possible. The Commission’s conclusion on that
point does not relieve it of its obligation to make a complete analysis of all factors that are relevant to the transaction
at issue and its context, including the situation of the beneficiary undertaking and of the relevant market, in order to verify
whether that undertaking is receiving an economic advantage which it would not have obtained under normal market conditions
(see, to that effect, *WestLB*, cited in paragraph 7 above, paragraphs 251 and 257).

99      It is necessary to consider the parties’ arguments as to the different characteristics of the contribution at issue by studying,
first of all, the arguments concerning the characteristics on which the Commission principally based its view that the remuneration
for the contribution at issue had to be compared to remuneration for time-limited silent partnerships; next, those concerning
the characteristics of the contribution at issue which the Commission deemed not to preclude such a comparison; and, lastly,
those concerning the characteristics of the contribution at issue which were not relied upon during the administrative procedure
or examined in the contested decision. It will also be necessary to examine the applicant’s objections regarding the reference
period taken into account by the Commission for the application of the private investor test.

The characteristics on which the Commission based its view that the remuneration for the contribution at issue had to be compared
to remuneration for time-limited silent partnership contributions

–       Risk of loss in the event of insolvency or liquidation

100    The Commission took the view that the contribution at issue represented the same risk in the event of insolvency or liquidation
as time-limited silent partnerships already on the market because, in such cases, it had to be repaid before share capital.
The Commission relied in that regard on the provisions of the contract and on an expert report produced by the Federal Republic
of Germany (recital 131 to the contested decision).

101    The relevant provisions of the contract are clauses 3 and 9. Clause 3, on ‘Participation in losses’, provides under subclause
(2):

‘The relationship between claims of the contributor and those of other investors within the meaning of Paragraph 10 of the
[Kreditwesengesetz] shall be determined in accordance with the chronological order of capital investment in the bank, claims
arising from earlier capital injections thus having priority. In the case of simultaneous capital contributions, claims shall
be satisfied according to the share of liability capital that they represent for the purposes of Paragraph 10(4) and (5) of
the [Kreditwesengesetz]. For contributions pursuant to Paragraph 10(4) of the [Kreditwesengesetz] the relevant date shall
be that on which the contribution was made; for participation rights the relevant date shall be the first date of their validity.’

102    Paragraph 9 on ‘Deferred priority’ provides:

‘In the event of the bank’s insolvency or liquidation, claims for the return of funds shall be dealt with – subject to Paragraph
3(2) ... – only after settlement of claims of all the bank’s creditors with the exception of lower-ranking private investors
in accordance with Paragraph 10 of the [Kreditwesengesetz].’

103    The expert report produced by the Federal Republic of Germany states:

‘Clause 3(2) of the contract does not in any way alter the priority laid down by law for repayment of the silent contribution
on any credit balance in the event of the bank’s insolvency or liquidation. This is demonstrated, first, by the economy of
the provision which, in its second sentence, refers only to capital within the meaning of Paragraph 10(4) and (5) of the [Kreditwesengesetz]
and which, in its third sentence, defines the date determining the chronological order for the purposes of that provision
only in respect of silent partnership contributions and participation rights.’

104    The applicant submits, first of all, that, although a silent partnership must, as a rule, be repaid before share capital,
the question whether the same applies to the contribution at issue remains open in view of the wording of the contract. It
states, furthermore, that it does not know upon what information the author of the expert report cited by the Commission relied
in concluding, contrary to the wording of the contract, that the contribution at issue has to be repaid before share capital.
In its reply, the applicant states that, in so far as claims of creditors who have invested core capital are settled in the
chronological order of their contributions in accordance with clauses 3(2) and 9 of the contract, the *Land* was required to proceed on the basis that its claim would be settled only after all others in the event of Helaba’s insolvency
or liquidation, not only after those of all ‘normal’ creditors, but also after those of all investors in core capital and
thus also after those of investors in share capital.

105    In that regard, it must be noted that the contract does not expressly provide that the contribution at issue must be repaid
after share capital and, moreover, that the reference to ‘other investors within the meaning of Paragraph 10 of the [Kreditwesengesetz]’
in the first sentence of clause 3(2) of the contract creates a problem of interpretation in relation to whether the priority
of claims on capital injected earlier also covers contributions of share capital.

106    It must be observed that, although the applicant states in certain passages in its pleadings that the contract provides for
the contribution at issue to be repaid after share capital, the applicant also states in its application that the question
whether the supplementary rule – under which silent partnership contributions must be repaid before share capital – is applicable
to the contribution at issue remains open. Moreover, in spite of the fact that the expert report mentioned by the Commission
was sent to the applicant at the Court’s request, the applicant did not put forward any arguments to challenge the interpretation
of the author of the expert report, according to which the reference to ‘other investors within the meaning of Paragraph 10
of the [Kreditwesengesetz]’ in the first sentence of clause 3(2) of the contract had to be understood in the light of the
second and third sentences of that provision, which relate to silent partnership contributions and participation rights, not
to share capital.

107    In those circumstances, it must be held that it cannot be concluded from the applicant’s arguments that the Commission made
a manifest error of assessment in taking the view, in the light of the expert report provided by the Federal Republic of Germany,
that the contribution at issue had to be repaid before share capital in the event of insolvency or liquidation. The mere fact
that the applicant interprets the contract differently than the expert report, the Commission and the parties to the contribution
at issue is not sufficient to prove that there has been a manifest error of assessment.

108    The applicant submits, second, that, although the contribution at issue had to be repaid before share capital, the risk of
loss would be similar to that of share capital since, in practice, lower-ranking creditors and investors receive nothing in
an insolvency.

109    Suffice it to note in that regard that, even on the assumption that every case of insolvency in the banking sector involves
both owners and lower-ranking creditors losing all their capital, which the Commission and the interveners deny, this feature
is common to all silent partnership contributions recognised as core capital, since they are all, necessarily, lower-ranking
claims. As a result, while this may be a feature that the contribution at issue has in common with share capital, it does
not distinguish the contribution at issue from silent partnership contributions recognised as core capital.

110    In those circumstances, it must be held that the applicant’s arguments do not support a finding that the Commission made a
manifest error of assessment in concluding that the contribution at issue represented the same risk as silent partnerships
in the event of insolvency or liquidation.

–       Profitability profile

111    The Commission took the view that the contribution at issue was a normal silent partnership in that, like an investor in a
time-limited silent partnership, the *Land* receives the entire agreed remuneration so long as the undertaking is not making a loss, whereas the investor in share capital
can claim only payment of a dividend that is in proportion to profits (recital 132 to the contested decision).

112    The applicant objects to that assessment and submits that both fixed and variable remuneration can be used for share capital
and for silent partnerships, and that each can prove to be as advantageous as the other, depending on the bank’s results.
It observes in that regard that, in the WestLB case, the Commission compared the transaction concerned with share capital,
in spite of the fact that the remuneration in question was fixed. It adds that, in any event, from the investor’s point of
view, the main question is whether payment of the remuneration depends on profits being made. It considers that to be the
case in this instance, since the *Land* receives the whole of its remuneration only if Helaba’s profits are at least equal to the remuneration and if no refinancing
is necessary for that purpose.

113    As regards, in the first place, the fixed or variable nature of the remuneration, it must be held as a preliminary point that
it is not a question in this instance of which is the more advantageous in a specific situation, but of determining whether
the Commission made a manifest error of assessment in concluding that the fact that the remuneration agreed between the parties
is fixed, and must be paid, in principle, as soon as Helaba is not making a loss, means the contribution at issue has more
in common with time-limited silent partnerships than with share capital because that method of remuneration is appropriate
to silent partnership contributions.

114    In that regard Helaba contends, pertinently, that, even where there is provision for fixed remuneration for share capital,
the actual profits which the bank’s owners make from their investment are always variable. In so far as profits exceeding
the fixed remuneration paid will be applied towards increasing the bank’s reserves which have to be distributed in the event
of liquidation or which have a positive influence on share values, the profits of an investor in share capital will exceed
the remuneration he received. That being the case, the final amount cannot be stipulated in advance, which thus means that
the final remuneration for the investment is variable.

115    Helaba also states, without contradiction by the applicant, that, according to the study of hybrid core capital lodged by
the applicant itself, the best core capital is that which takes the form of share capital, since that alone does not give
rise, inter alia, to fixed payment obligations.

116    It follows from this that, while that may not always be the case, it is common for silent partnerships to be remunerated on
a fixed basis and capital by means of variable dividends. In any event, while it is mandatory for the remuneration for silent
partnerships to be paid as soon as the contractual conditions laid down are satisfied, the owners can use the profits in various
ways, such as adding them to the reserves or distributing profits, depending, as a rule, on the will of the majority.

117    That conclusion is not affected by the applicant’s argument relating to the 1999 WestLB decision. It must be borne in mind
that that decision was annulled by the Court in *WestLB*, cited in paragraph 7 above. Moreover, in so far as the applicant’s argument could be understood as referring to the 2004
WestLB decision, the fact that the Commission took the view that the remuneration of capital transferred in the transaction
at issue should be compared to the remuneration of share capital does not mean that the profitability profile of that transaction
is appropriate to share capital, but simply that, in the context of the examination of the transaction as a whole, other factors
are strongly in favour of such a comparison. The Commission had, in particular, mentioned that the capital transferred was
regarded as core capital whereas the instruments which the Federal Republic of Germany suggested should be used for comparison
purposes could be used in Germany only as additional own funds.

118    As regards, in the second place, the applicant’s argument that, both in the case of the contribution at issue and in that
of share capital, the remuneration depends on the existence of profits, it must be held that the fact that payment of the
remuneration, even if fixed, is subject to the bank not recording an annual deficit and to such payment not giving rise to
such a deficit is common to all silent partnerships recognised as core capital, since this is required under Paragraph 10(4)
of the German Law on credit institutions (Kreditwesengesetz). Consequently, that aspect is unlikely to demonstrate that the
Commission made a manifest error of assessment in taking the view that the contribution at issue bore similarities to silent
partnerships recognised as core capital which already existed on the market.

119    Moreover, it must be held that the amount of profits required in order for the remuneration of the contribution at issue,
or other silent partnership contributions, to be payable is less than that required in order for the bank’s owners to receive
a dividend. The remuneration of silent partnership contributions constitutes, according to German legislation, an operating
expense which is therefore paid before tax and before the distribution of profits. It follows from this that, for investors
to receive their full remuneration, the bank only needs to achieve an annual surplus before tax equal to the remuneration
for contributions. By contrast, in order for the owners to receive the same amount in the form of dividends, the bank would,
as a rule, have to achieve an annual surplus before tax equal to the sum of the remuneration for silent contributions, tax
and that dividend.

120    The applicant’s argument, put forward in reply to a question put by the Court at the hearing, according to which that feature
does not really distinguish the contribution at issue and silent partnerships negotiated on the market from share capital,
since the owners can show distributable profits even in the case of annual losses – in particular by reducing reserves – contradicts
its argument that the conditions of payment of the remuneration for the contribution at issue are such that it has more in
common with share capital than with silent partnerships issued on the market. Whereas payment of remuneration for silent partnerships
requires an annual surplus, payment of dividends can proceed even in the case of annual losses, by showing a distributable
profit.

121    In addition, while payment of the remuneration for silent partnerships is mandatory once the conditions laid down in the contract
are satisfied, payment of dividends at the end of a financial year in which there have been annual losses does not follow
automatically but requires the approval of the majority of shareholders. Moreover, as the applicant acknowledged at the hearing
in reply to a question put by the Court, it would damage a bank’s reputation and the prospects of success of future issues
if the bank paid dividends after incurring annual losses and failing to pay the remuneration for silent partnership contributions.

122    In those circumstances, it must be concluded that the applicant has not demonstrated that the Commission made a manifest error
of assessment in taking the view that the profitability profile of the contribution at issue was characteristic of silent
partnership contributions.

The characteristics of the contribution at issue which the Commission regarded as not precluding a comparison of remuneration
for the contribution at issue with the remuneration for time-limited silent partnership contributions

123    The Commission rejected the applicant’s arguments in relation to the volume of the contribution at issue, the share of Helaba’s
core capital that it represents and its perpetuity.

–       Volume

124    The Commission took the view that the large overall volume of the contribution at issue did not necessarily mean that it had
to be classified as share capital. It referred in that regard to the fact that, as a result of the phased model, between 1999
and 2002 Helaba was able to use only part of the funds transferred to underpin its competitive business. Furthermore, it rejected
the comparison with the WestLB case on the ground that, in that case, the large volume of the capital injection was only one
of several indicia of its equivalence to share capital. It states in that regard that it also took into account, inter alia,
the fact that the funds were exposed to the full risk of loss in the event of insolvency or liquidation and the fact that
there was not yet a developed market in hybrid core capital instruments in Germany (recital 133 to the contested decision).

125    The applicant submits that it is appropriate, from the investor’s point of view, to distinguish two aspects – the total amount
of the issue and the size of the share attributable to each investor. It criticises the Commission for having failed to make
that distinction.

126    As regards, in the first place, the total amount of the issue, the applicant begins by disputing the grounds put forward by
the Commission for taking the view that, even though the large volume of the issue was taken into account in the WestLB case
as evidence of a similarity to share capital, the large volume of the contribution at issue did not warrant such classification
in this instance. Accordingly, it observes that, in its view, the contribution at issue participates, economically, in the
full risk of loss in the event of insolvency or liquidation, and submits that a capital market on which a private investor
would have made an investment in Helaba such as the contribution at issue never existed in 1998 or afterwards. It submits
that both the Commission in the 1999 WestLB decision, and the Court in its *WestLB* judgment, cited in paragraph 7 above, attached considerable importance to the high volume of the contribution of funds when
classifying the transaction. The applicant takes the view that the fact that the volume of the contribution at issue is particularly
high and, therefore, of considerable importance in the present case, is confirmed by the comparison with the transactions
mentioned by the Commission in recital 164 to the contested decision, but also by the fact that the contribution at issue
accounts for 25% of the total European volume of hybrid core capital instruments in 1998.

127    Second, according to the applicant, the Commission’s reasons in relation to the phased model cannot be accepted since a private
investor would not have accepted it, and it is wrong to conclude that this arrangement amounts to five smaller contributions
since the entire contribution at issue was immediately recognised as core capital of Helaba and, moreover, in the case of
contributions paid at different times, the conditions of each contribution would be different whereas, in the present case,
the entire contribution is subject to the same conditions.

128    So far as, first of all, the comparison with the WestLB case is concerned, it should be borne in mind that the 1999 WestLB
decision on which the applicant relies was annulled by the Court. Furthermore, while it is true that, in its 2004 WestLB decision
– adopted following that annulment and referred to in recital 133 to the contested decision – the Commission took account
of the large volume of capital transferred in treating the transfer at issue in that case as share capital, it did not rely
on the overall volume of the transaction but on the part of WestLB’s own funds which the capital concerned represented as
well as, definitively, on the fact that, when that transaction was carried out, hybrid core capital instruments constituted
no more than 20% of core capital, were not regarded as core capital in Germany and were not all issued for unlimited duration
(recitals 204, 206, 208 and 209 to the 2004 WestLB decision).

129    By contrast, so far as the contribution at issue is concerned, the amount of that contribution (EUR 1.264 billion), albeit
higher than that of the transactions used by the Commission for comparison purposes, is still far removed from the volume
of the transaction at issue in the WestLB case (EUR 3.02 billion shown on the balance sheet, of which EUR 2.05 billion was
recognised as original own funds) (recitals 54 and 71 to the 2004 WestLB decision). Furthermore, as the Commission points
out, the contribution at issue was granted at the end of 1998, whereas the contribution in the WestLB case dated back to 1991.
There is no dispute about the fact that, at the end of 1998, hybrid core capital instruments could already be regarded, according
to German legislation, as original own funds and not only as additional equity, could be issued for an indefinite period and,
by satisfying the requirements of the Sydney Declaration, could represent a significant part of a bank’s core capital.

130    The applicant’s argument that, in its *WestLB* judgment, cited in paragraph 7 above, the Court attached considerable significance to the criterion of the volume of the
investment must also be rejected. The Court held in that judgment that the Commission had explained why it took the view that
the differences between the hybrid core capital instruments and the transaction at issue were such that a comparison of that
transaction with those instruments was of only limited value, and stated that, in particular, the Commission had drawn attention
to the fact that the hybrid core capital instruments to which the applicants in that case referred generally constituted only
a small part of the own funds of a bank, unlike the funds transferred to WestLB. The Court thus confined itself to ascertaining
that the Commission’s reasoning in that case was not vitiated by a manifest error of assessment, without confirming that the
criterion of the large volume of funds transferred was always conclusive. Moreover, it observed that the Commission had a
wide margin of assessment in making that determination (*WestLB*, cited in paragraph 7 above, paragraphs 350 and 351).

131    Next, as regards the reasons put forward by the Commission to the effect that, in consequence of the phased model, between
1999 and 2002 Helaba was able to use only part of the funds transferred to underpin its competitive business, it has been
held in paragraphs 58 to 73 above that the Commission did not make a manifest error of assessment in accepting that phased
model. Furthermore, while it is true, as the applicant points out, that the entire contribution was shown on Helaba’s balance
sheet from the date of the contribution, the fact remains that the part in excess of the annual tranches provided for by the
phased model, like the part which was required to underpin housing promotion activities, was regarded by the Commission as
fulfilling merely a liability function, not the expansion of its competitive business, and that, as a result, its remuneration
was fixed by reference to the remuneration which a private investor would require for a guarantee, instead of by reference
to the remuneration which such an investor would require for a silent partnership contribution enabling the bank to expand
its competitive business. Given that the silent partnership contributions facilitate an immediate expansion of competitive
business, the Commission was entitled to take the view – without making a manifest error of assessment – that, taking the
phased model into account, the contribution at issue was not equivalent to a silent partnership contribution of EUR 1.2 billion
enabling Helaba to expand its business immediately, but to a series of five silent partnership contributions of between EUR 180 million
and EUR 380 million.

132    That conclusion is not affected by the applicant’s argument that, where contributions are paid at different times, the conditions
of each contribution differ, whereas the contribution at issue is subject to the same conditions. It must be noted that the
applicant does not explain why the conditions applicable to five successive contributions would necessarily differ.

133    As regards, in the second place, the part of the issue attributable to each investor, the applicant maintains that the fact
that the issue was not shared between a certain number of investors but was taken up by a single investor is also unusual.
It states in that regard that the risk run by an investor increases gradually with the size of the capital contributed both
in absolute terms and in comparison with the risk run by other operators making smaller investments. The applicant takes the
view that, under those circumstances, the contribution at issue which was made by a single investor is similar to an investment
in share capital.

134    In that regard, suffice it to note that the applicant does not put forward any evidence at all from which it might be concluded
that it is common for the remuneration of an investor subscribing to part of a silent partnership contribution to vary according
to the size of that part in the issue as a whole, and therefore that investors who subscribe to larger volumes are more highly
remunerated than others. In addition, in the transactions which the Commission used for comparison purposes in the contested
decision, reference is made only to a remuneration rate, and there is nothing to suggest that investors who invested more
received a higher remuneration. Furthermore, the applicant does not explain how the increase in the risk run by the *Land* as a result of its wish not to split the special fund makes its investment similar to an investment in the share capital
of a bank, since the latter investment is not necessarily distinguished by its size and a shareholder can subscribe to an
amount that is smaller both in absolute terms and in comparison with total capital.

135    In those circumstances, it cannot be concluded from the applicant’s arguments that the Commission made a manifest error of
assessment in finding that the volume of the contribution at issue did not preclude the view that that contribution had more
in common with silent partnership contributions issued on the market than with share capital.

–       Share capital buffer

136    The Commission took the view that the reduced share capital buffer was not such that it could rule out a private investor
having made a similar investment – in the form of a silent partnership contribution – to the contribution at issue. It relied
in that regard on the fact that the Landesbanken use silent partnership contributions to a greater extent than private banks
since, as institutions governed by public law, they cannot raise share capital on the financial markets. It stated that investors,
including some private investors, were more inclined to accept a smaller share capital buffer in the case of the Landesbanken
because of their reduced risk structure (recital 134 to the contested decision).

137    The applicant submits that, although the Commission raises the fact that the share capital buffer is smaller in the present
case than in that of private banks, it disregards the fact that the contribution at issue has four characteristics which give
it a special liability quality and which make it appear to be a means – in common with share capital – of guaranteeing Helaba’s
capital base permanently. It objects, moreover, to the Commission’s assessment that the reduced nature of the share capital
buffer did not enable it to rule out a private investor making an investment comparable to the contribution at issue in the
form of a silent partnership contribution.

138    As regards, on the one hand, the four characteristics of the contribution at issue which give it a special liability quality,
first, the applicant mentions the fact that it represents an abnormally high proportion of Helaba’s core capital, namely 40%.
Second, it notes that this high proportion of Helaba’s core capital was taken up by a single investor whereas, in the silent
partnership contributions used by the Commission for comparison purposes, no individual investor had more than 1%. The share
capital buffer for the investor is thus 99% in the case of the silent partnership contributions used for comparison purposes
and 60% in the case of the contribution at issue. Third, it emphasises that the whole of that contribution was deemed to be
core capital and not merely equity capital. Fourth, it notes that the entire contribution was deemed to constitute core capital
of Helaba and not just of the group to which Helaba belongs, thus giving Helaba greater flexibility regarding its use, with
the result that a private investor would have required a premium on his remuneration.

139    In that regard it must be held, first of all, that the contribution at issue in itself represents a really very significant
proportion of Helaba’s core capital whereas, according to the Sydney Declaration, time-limited silent partnerships may account
for no more than 15% of core capital. There is, without question, a difference between the contribution at issue and time-limited
silent partnership contributions.

140    Next, as regards the fact that the contribution at issue was taken up by a single investor who, as a result, holds 40% of
Helaba’s equity capital, it must be held that, in economic terms, that fact cannot transform a silent contribution into share
capital, in just the same way as the fact that an investor holds a minute proportion of the share capital does not make his
investment any less of a share capital investment.

141    Admittedly, the equity share held by an investor determines the level of his exposure to risk, but it does not affect the
nature of that risk or the classification of investments in economic terms. Thus, the essential characteristics distinguishing
silent partnership contributions from share capital – their ranking in the event of insolvency or liquidation, conditions
of payment of remuneration and the advantages or disadvantages to the bank associated with the use of one or the other approach
– remain the same, irrespective of the size of the individual investment.

142    As to the fact that the contribution at issue was deemed to form part of the core capital of Helaba rather than of its group,
it must be noted that the Commission and the interveners did not deny that this was in fact a particular feature of the contribution
at issue. However, the fact – referred to by the applicant – that that classification gives Helaba greater flexibility in
its use of the capital does nothing to increase the risk profile of the contribution at issue in comparison with silent partnership
contributions or to make it similar to share capital.

143    Lastly, as regards the fact that the entire contribution at issue was regarded as core capital, the applicant merely mentions
that feature without developing the argument. In so far as that feature is a product of the fact that the contribution at
issue was devised as a ‘perpetual’ without a step-up provision, reference must be made to the findings of the Court in relation
to the permanent nature of the contribution at issue (see paragraphs 150 to 154 below).

144    As regards, on the other hand, the Commission’s assessment that the reduced share capital buffer was not such that it could
rule out the possibility of a private institutional investor having made a similar investment – in the form of a silent partnership
contribution – to the contribution at issue, the applicant maintains that the fact that the Landesbanken are more likely to
resort to silent partnerships does not mean that investors will forgo appropriate remuneration. It adds that those silent
partnerships were, in any event, taken up by their owners, public investors, not by private investors and, therefore, they
could not be referred to by the Commission for comparison purposes. Concerning the Commission’s assertion that investors would
be more inclined to accept a smaller share capital buffer in the case of the Landesbanken because of their reduced risk structure,
the applicant submits that the comparison between the rating of the Landesbanken and that of private banks shows that the
risk structure of the Landesbanken is not reduced.

145    It must be noted that, as the applicant indicates, it is not a question of whether the contribution at issue could be issued
on the market in spite of a share capital buffer of only 60%, but whether that factor means that the contribution at issue
has more in common, so far as its risk profile is concerned, with time-limited silent partnership contributions or with share
capital and requires a higher level of remuneration.

146    In that regard, it is apparent from the documents before the court that, prior to the Sydney Declaration, silent partnership
contributions represented only a small proportion of banks’ core capital. It is only as a result of that declaration, in October
1998, that clarification was provided as to the fact that hybrid core capital instruments could be recognised as core capital
beyond the 15% limit, and that the conditions for that recognition were specified. It may, therefore, be assumed that when
the parties eventually reached agreement on the contribution at issue in December 1998, the effects of the Sydney Declaration
in terms of the proportion of core capital obtained via hybrid core capital instruments, and thus as regards the share capital
buffer, could not yet be seen on the market.

147    It follows from the contested decision (recitals 129 and 134) that both private banks and the Landesbanken subsequently increased
the proportion of hybrid core capital instruments in their core capital, that increase being particularly significant in the
case of the Landesbanken. It is also apparent from the contested decision (recitals 179 and 180) that the hybrid core capital
instruments which were issued by the banks after the Sydney Declaration and which satisfied the declaration’s conditions for
recognition as core capital beyond the 15% cap were not remunerated at a much higher rate than silent partnership contributions
issued previously. Lastly, it follows from the contested decision (recital 134) and from the Commission’s reply to a written
question of the Court that the investors who subscribed to the silent partnership contributions issued by the Landesbanken
included private investors who had not required higher remuneration for contributions to take account of the banks’ reduced
share capital buffer.

148    In those circumstances, the applicant’s arguments do not support the view that, in the light of the reduced share capital
buffer, the risk profile of the contribution at issue is, in economic terms, similar to share capital.

149    In the light of the foregoing considerations, there is no need to examine the applicant’s objections to the Commission’s assertion
that investors would be more inclined to accept a reduced share capital buffer in the case of the Landesbanken because of
their reduced risk structure. The reasons why investors would be more inclined to accept a reduced share capital buffer in
the case of the Landesbanken are unimportant in the present case, since it is established that the existence of a reduced
share capital buffer does not prevent private investors from taking up the silent partnership contributions of the Landesbanken
or induce them to seek higher remuneration than for silent partnership contributions issued by banks with a larger share capital
buffer.

–       Perpetuity of the contribution and the inability to transfer it

150    In the contested decision, the Commission took the view, in essence, that the perpetuity of the contribution and the inability
to transfer it did not justify the remuneration for the contribution at issue being compared to the remuneration for share
capital rather than to the remuneration for time-limited silent partnership contributions, and that the effect of that feature
should be examined in the context of the calculation of adequate remuneration. It justified that assessment by stating that
the perpetuity of the contribution at issue involved, primarily, the risk for the investor of not being able to profit from
market interest rate increases, but that it did not affect the level of risk in the event of insolvency or liquidation (recital
138 to the contested decision).

151    The applicant submits that it is not the unlimited duration of the contribution at issue that increases its risk profile in
comparison with silent contributions issued on the market, but the fact that the *Land* cannot withdraw its investment because the contribution is not fungible and that it cannot transfer its rights to a third
party without Helaba’s consent. By contrast, ‘perpetuals’ issued on the market are listed on the stock exchange, which means
that investors can withdraw their investment at any time and are not tied to the bank indefinitely. In its reply, the applicant
is critical of the fact that, in its view, the Commission treats perpetuity and fungibility as though the two were completely
unrelated, whereas the risk profile of the contribution at issue is the product of the interaction of those two characteristics,
the result of which is that it is impossible for the *Land*to withdraw its investment. The applicant, moreover, opposes the Commission’s arguments that fungibility is not precluded
but merely restricted.

152    It must be noted that, in reply to a question put by the Court, the parties confirmed at the hearing that there are silent
partnership contributions made, as in the present case, by mutual agreement between the issuing bank and investors, which
are not listed on the stock exchange. It follows from this that the fungibility associated with the listing of a contribution
on the stock exchange is not a characteristic of all silent partnership contributions taken up by private investors. It is
not, however, apparent from the documents before the court that contributions which are negotiated by mutual agreement are
remunerated at a higher rate than those listed on the stock exchange.

153    In any event, it must be observed that the contribution at issue can be distinguished from share capital in that respect also
since, as the applicant submitted during the administrative procedure preceding the adoption of the contested decision (recital
68 to the contested decision), partners, at least of joint stock companies such as the German banks which issued the contributions
used by the Commission for reference purposes, are free to sell their investments at any time.

154    It follows from this that, even on the assumption that the *Land*’s investment is not fungible and that that increases the risk of loss in the event of insolvency or liquidation in comparison
with silent partnership contributions, this factor also distinguishes the contribution at issue from an investment in the
share capital of the banks which issued the contributions used by the Commission for reference purposes, and does not mean
that the Commission made a manifest error of assessment when it took the view that the contribution at issue should be compared
with other silent partnership contributions issued on the market instead of with share capital, while taking into account
– by means of the requisite premiums, including that relating to perpetuity – its specific features.

Characteristics of the contribution at issue not relied on during the administrative procedure or considered in the contested
decision

155    The applicant submits that inherent in the contribution at issue is a significant risk of loss both of the remuneration and
of the funds contributed, even in circumstances other than those of liquidation or insolvency considered above. It refers
in that regard to the fact that the contribution at issue participates in Helaba’s annual losses and to the risks run by the
*Land*of not being paid the remuneration if Helaba makes an annual loss and of not being able to recover the capital contributed.

156    As regards participation in Helaba’s annual losses, the applicant submits that, in economic terms, the contribution at issue
participates in those losses in the same way as share capital in so far as, under clauses 3(1) and 8(1) of the contract, the
contribution participates fully in any annual loss made by Helaba, and any losses limit the right of the *Land* to be reimbursed in the event of withdrawal. It further submits that the fact that participation in losses is typical of
all silent partnership contributions is irrelevant, since it is important to assess that factor in the context of all the
economic features of the contribution at issue. It takes the view, furthermore, that the fact that, under clause 4 of the
contract (clawback provision), in the event of a loss any future profits must be applied towards refinancing the contribution
does not place the *Land* in a better situation than that of a shareholder because it does not profit, unlike shareholders, from the increase in the
value of the undertaking.

157    It must be held in that regard that, while it is true that the participation in losses makes the contribution at issue similar
to share capital, hence its recognition by BAKred as part of Helaba’s core capital, the fact remains that that does not distinguish
it from other silent partnership contributions which are also recognised as core capital.

158    It is certainly the case that, in this instance, the reduction in the value of the contribution on account of Helaba’s losses
will be greater than it would be in the case of the contributions which the Commission used as a reference. Since, however,
that is because the contribution at issue accounts for a greater proportion of Helaba’s core capital than other contributions
represent in the equity capital of the issuing banks, it is not a characteristic of the contribution at issue that can be
distinguished from its volume in relation to Helaba’s entire core capital (see paragraphs 136 to 149 above).

159    As regards the clawback provision in clause 4 of the contract (see paragraph 156 above), suffice it to note that, while it
is possible – as the applicant claims – that it does not necessarily give the *Land* an advantage over investors in share capital, since the question which investment is more advantageous depends on the circumstances
of each financial year, it must be held that it distinguishes them in any event, and therefore ensures that the contribution
at issue has more in common with a silent partnership contribution, which may include such a provision, than with share capital.

160    In those circumstances, the participation of the contribution at issue in losses cannot demonstrate that the Commission made
a manifest error of assessment in comparing the remuneration for the contribution at issue with remuneration for time-limited
silent partnership contributions.

161    As regards the risk run by the *Land* of not receiving the remuneration if Helaba makes an annual loss, the applicant submits that the remuneration required to
be paid to the *Land* represents a significant part of Helaba’s profits and, in consequence, there is a significant risk that the *Land* will not receive it. The applicant maintains that the remuneration required to be paid to the *Land* represented a much more substantial proportion of Helaba’s profits in the year of the contribution at issue than the proportion
which the remuneration for contributions issued by the private banks used for reference purposes in the contested decision
represented in the profits of each of those banks.

162    As regards the risk run by the *Land* of being unable to recover the funds contributed, the applicant submits that, given the quantitative significance of the
contribution at issue in relation to Helaba’s core capital, Helaba would not be able to repay the contribution to the *Land* because its profits would not be such that it could replace the core capital which it would thereby lose.

163    It must be observed that those two characteristics of the contribution at issue are attributable, in essence, to the fact
that it represents a greater proportion of Helaba’s core capital than that represented by the reference transactions in the
banks’ core capital. As has been held in relation to participation in losses (see paragraph 158 above), there is no need,
therefore, to examine those two characteristics separately. In addition, as regards the proportion of Helaba’s profits in
1998 accounted for by the remuneration of the *Land*, it must be noted, first, that the applicant fails to take into account the fact that, under the phased model, Helaba was
required to remunerate the entire contribution at issue – with the exception of the part needed to underpin the promotion
of housing construction – at the rate of 1.4% only from 2003 and, second, that it uses for its comparison Helaba’s profit
after tax in 1998 instead of its annual pre-tax surplus, although there is no dispute about the fact that, since the contribution
at issue is a silent partnership contribution, under German legislation its remuneration constitutes an operating expense
payable before tax.

164    It follows from this that the applicant’s arguments in relation to the risks run by the *Land* of not receiving the remuneration if Helaba makes an annual loss and of being unable to recover the funds contributed by
way of a repayment do not support the conclusion that the Commission made a manifest error of assessment in comparing the
remuneration for the contribution at issue with the remuneration for time-limited silent partnership contributions.

The market situation at the time of the transfer of the contribution at issue

165    First, the applicant claims that the Commission erroneously applied the private investor test by failing to put itself in
the situation that obtained on the date of that contribution, 31 December 1998, in order to classify the contribution at issue
in economic terms.

166    It observes in that regard that, in recital 129 to the contested decision, the Commission refers to the practice of private
banks described by the Federal Republic of Germany and summarised in recitals 96 and 99 to that decision. In those recitals,
the Commission indicated that the Federal Republic of Germany had explained that (i) only a few months after Helaba, Deutsche
Bank had taken up a ‘perpetual’ on the capital market; (ii) since 1999, the market had not attached any major importance to
the distinction between financial instruments of limited and unlimited duration; and (iii) the applicant’s assertion that
only share capital could be used for very large volumes was at odds with the size of the silent partnership contributions
which private credit institutions had taken up on the capital market in 1998 and in 1999 and since. It observes, moreover,
that the table in recital 101 to the contested decision shows the trend between 1998 and 2003 of the proportion of the core
capital of three private banks that was made up of hybrid capital. It maintains, referring to the practice of German banks
thus presented by the Federal Republic of Germany, that the Commission is relying on information which was not available until
after the contribution at issue was made.

167    The applicant adds that, at the end of 1998, the *Land* could not foresee the subsequent trends in silent partnership contributions and ‘perpetuals’ on the capital market. It claims
that, therefore, for in classifying the contribution at issue in economic terms, the Commission was required to take into
consideration only the market situation as it was in 1998, not future trends of the capital market which were unknown at the
time the contribution at issue was made.

168    It must be borne in mind that, according to the case-law, comparisons between the conduct of public investors and that of
private investors must be made in relation to the attitude which a private investor would have had at the time of the transaction
in question, having regard to the information available and developments foreseeable at that time (Case T‐16/96 *Cityflyer Express* v *Commission* [1998] ECR II‐757, paragraph 76, and *WestLB*, cited in paragraph 7 above, paragraph 246).

169    In the present case, it must be held, first of all, that the Commission’s reference in recital 129 to the contested decision
to the practice of German banks is intended merely to substantiate its interpretation of the Sydney Declaration as not permitting
the conclusion to be drawn that innovative permanent financial instruments cannot under any circumstances be recognised as
core capital or that they too are covered by the limit of 15% of core capital. The Commission thus refers to that practice,
stating that it supports the contention that innovative permanent financial instruments can be used as equity capital beyond
the 15% limit. The Commission does not, therefore, base its assessment on those transactions postdating the contribution at
issue, but merely uses them to support its own interpretation of the Sydney Declaration.

170    In any event, it must be held that the applicant does not explain why the market trend following the Sydney Declaration was
not foreseeable by the *Land* and Helaba when they reached agreement on the contribution at issue. That explanation is all the more necessary since it
follows from the contested decision that this market trend confirmed the assessment of the parties to the contribution at
issue that, on the one hand, ‘perpetuals’ did not have to be remunerated by reference to share capital and, on the other,
the size of the share capital buffer did not affect the level of remuneration.

171    Second, the applicant denies that, at the time of the contribution at issue, there was a developed market for hybrid core
capital instruments in Germany on which Helaba could have issued a contribution such as the contribution at issue. It thus
maintains that a ‘perpetual’ without a step-up clause such as the contribution at issue could not have been issued in 1998
for institutional investors such as the *Land*. It was only from 2004 on that institutional investors would have agreed to take up such ‘perpetuals’. Moreover, these ‘perpetuals’
covered a smaller volume and were listed on the stock exchange. Furthermore, the contribution at issue could not have been
issued subsequently because of its volume, owing to the fact that it was taken up by a single investor, and recognised in
full as core capital – of Helaba, not of the group to which it belongs.

172    The applicant submits that the Commission overlooks that fact when it states that Helaba could have obtained funds by issuing
several smaller tranches. It argues, inter alia, that that assertion infringes the private investor test since it involves
taking into account the conduct of an investor in a situation other than that of the *Land*, and an inversion of priorities in so far as it is based on the alternatives which Helaba would have had in the future instead
of on the question whether a private investor would have granted Helaba the same contribution on the same terms. It takes
the view, therefore, that the lack of development of the hybrid core capital instruments market in Germany should have led
the Commission to conclude that Helaba could only have obtained a similar volume of core capital on the market in the form
of share capital.

173    It should be noted that the applicant does not directly challenge the Commission’s reference in recital 137 to the contested
decision to the existence of a ‘perpetual’ without a step-up clause issued in 1987 and taken up by institutional investors,
and does not put forward any arguments to demonstrate that the Commission was not entitled to base its assessment on that
evidence. Thus, although it states that the first issue of a ‘perpetual’ without a step-up clause taken up by German institutional
investors was in 2004 and the first issue of that kind by a German bank in 2005, those assertions are not sufficient to demonstrate
that the Commission made a manifest error of assessment in relying on the transaction mentioned in recital 137 to the contested
decision in rejecting the argument that institutional investors were not prepared to subscribe to ‘perpetuals’ without a step-up
clause, and therefore that the contribution at issue could be compared only to share capital, on account of its unlimited
duration.

174    As regards the differences invoked by the applicant between the contribution at issue and silent contributions issued on the
market, it must be held that these correspond to arguments which have already been considered and rejected.

175    With regard to the applicant’s argument that the Commission infringed the private investor test by stating that Helaba could
have obtained funds by issuing several smaller tranches, it must be borne in mind that, while it is true that the private
investor test requires an assessment of whether such an investor would have proceeded with the transaction in question on
the same terms, the fact remains that, according to the case-law cited in paragraphs 35 and 36 above, the purpose of the control
of State aid is to determine whether the recipient undertaking receives an economic advantage which it would not have obtained
under normal market conditions and, with that aim in mind, it cannot be the case that only the investor’s point of view must
be taken into account. Therefore, the applicant cannot claim that the question whether Helaba could have obtained the same
advantages at the same price on the market is irrelevant, when that question is crucial for determining what the outcome of
negotiations between Helaba and a hypothetical private investor in the situation of the *Land*would have been.

176    In those circumstances, the applicant’s complaints relating to the application of an incorrect reference period and an erroneous
assessment of the market situation at the time of the transfer of the contribution at issue must be dismissed.

Conclusion as to the classification of the contribution at issue as a silent partnership contribution

177    There is no dispute about the fact that the contribution at issue is a special instrument which does not correspond precisely
either to silent partnership contributions issued on the market, whether of limited or unlimited duration, or to share capital.

178    However, it is apparent from the foregoing review that the contribution at issue is similar to time-limited silent partnership
contributions recognised as core capital on account of the following characteristics: its ranking in the event of liquidation
or insolvency, both in comparison with creditors of the bank and with the owners; the fact that there is an annual remuneration
obligation the amount of which is fixed in the contract; the fact that the remuneration is suspended in the event of an annual
loss, that it is the only profit an investor can make from his contribution in the absence of any participation in increases
in the value of the undertaking, and that Helaba is obliged to pay unpaid remuneration in the years following the year, or
years, in which the remuneration was not paid; the fact that it participates in the bank’s annual losses and the fact that
there is a clawback provision in case the value of the contribution is reduced by losses.

179    By contrast, the contribution at issue can be distinguished from silent partnership contributions which are time-limited and
recognised as core capital, and is similar to share capital in that it is of unlimited duration and, as a result, could be
recognised as core capital beyond the 15% limit, and in that it represents a very significant proportion of the core capital
and was recognised as core capital of Helaba, not of the group to which it belongs.

180    Lastly, it is distinguishable both from the majority of silent partnership contributions which are time-limited and recognised
as core capital and from the share capital of private banks which issued the contributions used by the Commission for comparison
purposes in that the *Land*’s investment is not fungible, or is fungible in only a very limited way. Furthermore, it is distinguishable from the silent
partnership contributions used by the Commission as a reference and from a large number of share capital investments in that
the *Land* has a very significant proportion of the bank’s equity capital.

181    It follows from this that the only characteristics of the contribution at issue which distinguish it from time-limited silent
partnership contributions and which, at the same time, it has in common with share capital are, on the one hand, its unlimited
duration and, on the other, the fact that it accounts for more than 15% of Helaba’s core capital. However, it is apparent
from the examination above that the applicant has not demonstrated that these characteristics, which are specific to ‘perpetuals’,
result in a market remuneration more akin to that of share capital than to that of time-limited silent partnership contributions
and, moreover, that there is no reason to think that the *Land* and Helaba were unable to foresee that trend.

182    In the light of the foregoing, the applicant’s arguments do not support the proposition that the Commission made a manifest
error of assessment in concluding, after an overall review of the characteristics of the contribution at issue, that it had
more in common with silent partnership contributions than with share capital and that, therefore, its remuneration should
be compared to the remuneration for time-limited silent partnership contributions of a size regularly seen on the market,
to which a premium should be added if necessary.

4.     *Comparison of the remuneration for the contribution at issue with the liability remuneration required on the market*

183    With regard to the comparison of the remuneration for the contribution at issue with the liability remuneration required on
the market, the applicant challenges the Commission’s assessments concerning the account taken of the additional charge arising
from the trade tax which Helaba has to pay by reason of the contribution at issue, the comparison of the initial remuneration
agreed by the *Land* and Helaba with the basic liability remuneration required on the market, and the comparison of the perpetuity premium agreed
in the present case with perpetuity premiums required on the market.

a)     Taking the trade tax into account

The contested decision

184    In the Commission’s view it was appropriate to take into account – for the purposes of a comparison between the remuneration
agreed for the contribution at issue and the market remuneration – the effect of the trade tax to which the contribution at
issue is subject, which, in this instance, is 0.26% per annum. It stated in that regard that, although that tax had to be
paid by institutional investors conducting business in Germany, who would require a higher remuneration as a result, in this
instance it had to be paid by Helaba because the *Land* was not liable for it. The Commission therefore took the view that the total charge for Helaba which had to be compared to
the market remuneration range was not the 1.4% remuneration agreed between the parties but 1.66% (recitals 156 to 159 to the
contested decision).

Arguments of the parties

185    The applicant challenges that assessment and argues that investors do not take the tax status of the recipient of an investment
into account in their expectations of yield, and that the Commission had not established that, on the market, the recipient
would be in a position to bear the investor’s full tax burden. It claims that there is no difference in the amount of remuneration
paid to different investors for the same contribution, even though domestic investors not engaged in any industrial or commercial
activity and foreign investors are not subject to trade tax when making silent partnership contributions and are, therefore,
in the same situation as the *Land*.

186    The applicant further submits that, in any event, the additional burden to be borne by Helaba is not equal to the trade tax
rate but considerably less, in so far as that tax constitutes a business expense for Helaba and, accordingly, reduces its
taxable income. Thus, after payment of corporation tax (40% in Germany at the time) and the solidarity surcharge (5.5%), the
additional charge is only 0.15%.

187    The Commission and the interveners oppose those arguments.

Findings of the Court

188    As regards, first of all, the need to take into account the effect of the trade tax on the cost to Helaba of the contribution
at issue, it must be noted that the applicant does not deny that Helaba is required to pay that tax because the *Land* is not liable for it. It does indeed state that certain other investors are not liable for that tax either and that that
does not alter the amount of remuneration paid, but the Federal Republic of Germany and Helaba confirmed at the hearing that,
while it is true that banks must, as a rule, pay trade tax on remuneration paid to investors who are not established in Germany
or not engaged in any industrial or commercial activity, the fact remains that neither the banks nor the German authorities
are aware of the identity of investors holding interests arising from silent partnership contributions and that, therefore,
the banks do not pay trade tax in respect of remuneration paid, although some of it is paid to investors who are not liable
to tax.

189    It must be observed that, since the Commission’s reasoning is based not on the fact that the *Land* is not required to pay the tax, but on the fact that Helaba is thereby bearing an expense which it would not have to bear
if the contribution had been made by a private investor on the market, the banks’ non-payment in practice of trade tax in
respect of remuneration paid to investors who are not established in Germany or who are not engaged in any industrial or commercial
activity means that the applicant’s argument is irrelevant. In the present case, unlike in the case of other silent partnership
contributions on the market, Helaba has to bear an additional expense as a result of the payment of trade tax. That expense,
while not involving a higher remuneration for the *Land*, has to be taken into account in assessing whether, on account of the contribution at issue, Helaba is bearing an expense
at least equivalent to that borne by banks issuing silent partnership contributions on the market and, therefore, whether
it is receiving an advantage.

190    In those circumstances, it must be held that the applicant has not demonstrated that the Commission made a manifest error
of assessment by taking into account the effect of the trade tax on the total expense borne by Helaba on account of the contribution
at issue.

191    Next, as regards the calculation of the actual charge borne by Helaba, it is not, in the present case, a question of establishing
the final net cost to Helaba of the contribution at issue, but of comparing that cost with the expense associated with a time-limited
contribution taken up by a private investor. To that end, the charges arising from one or other contribution can be compared
before or after tax, provided that they are assessed at the same point in time. In so far as the Commission takes as a reference
in the contested decision the pre-tax charge represented by the silent contributions which it uses for comparison purposes,
it is necessary also to take into account the pre-tax expense resulting from trade tax (see, to that effect, *WestLB*, cited in paragraph 7 above, paragraph 384).

192    It follows from this that the applicant has also failed to demonstrate that the Commission made a manifest error of assessment
in concluding that the charge resulting from payment of trade tax, which must be taken into account in order to compare the
remuneration of the contribution at issue with that of existing contributions on the market, is the pre-tax charge.

b)     Comparison of the initial remuneration with the basic liability remuneration required on the market

The contested decision

193    The Commission states that the review of the 10 transactions referred to by the Federal Republic of Germany, set out in recital
164 to the contested decision, indicates a liability remuneration range of 0.75% to 1.6% per annum (recitals 162, 163, 165
to 167 to the contested decision).

194    The Commission goes on to consider the various specific features of the contribution at issue that could have an effect on
the amount of remuneration. It takes the view that it is not necessary to apply a premium in respect of the volume of the
transaction or a reduction in respect of Helaba’s rating. It considers, however, that, as a result of the reduced share capital
buffer, it should be noted that a private investor would not have accepted a basic liability remuneration in the lower part
of the range (recitals 168, 169, 171 and 172 to the contested decision).

195    The Commission concludes from this that, since the expense borne by Helaba on account of the contribution at issue is in the
middle or upper part of the market range, there is no evidence of an advantage for Helaba or, therefore, of State aid (recital
172 to the contested decision).

Arguments of the parties

196    In the first place, the applicant observes that, owing to its risk profile, the contribution at issue should be compared to
a share capital investment and not to a time-limited silent partnership contribution, and submits that, as a result, the Commission’s
calculation, based on a market range established from liability remuneration fixed in respect of time-limited silent partnership
contributions, is incorrect. In addition, by erroneously comparing the contribution at issue to silent partnership contributions,
the Commission omitted to take into account the fact that, apart from the premium which had to be applied to take account
of the perpetuity of the contribution at issue, other premiums would be necessary to take account of Helaba’s financial situation,
the lack of publicity and lower transaction costs.

197    In the second place, the applicant criticises the way in which the Commission calculated the basic liability remuneration.

198    It submits that the Commission did not assess the level of the basic liability remuneration in the light of the market situation
and environment as at the end of 1998 but in the light of later transactions.

199    Moreover, it submits that, owing to the differences between the contribution at issue and the reference transactions, the
remuneration of the contribution at issue should be above the basic liability remuneration market range established on the
basis of the reference transactions. It takes the view that the Commission not only failed correctly to assess the differences
between the contribution at issue and the reference transactions which it examined, but, in addition, failed to examine other
significant differences.

200    With regard to the differences which the Commission examined, namely the volume of the contribution at issue, the size of
the share capital buffer and Helaba’s rating, the applicant claims that all these factors should have resulted in a premium
on the basic liability remuneration as compared with the reference transactions. Regarding the differences between the contribution
at issue and the reference transactions which the Commission did not examine and which should have resulted in an increase
in the basic liability remuneration, the applicant mentions, first, the fact that the entire contribution at issue was taken
up by a single investor and, second, the fact that the contribution at issue is not fungible, with the result that the *Land* cannot withdraw its investment from Helaba.

201    Lastly, the applicant submits that the USD 1 billion Dresdner Bank contribution mentioned in the contested decision together
with other reference transactions proves that the remuneration of the contribution at issue should have been above the reference
range since, in spite of what – in the applicant’s view – is a much lower risk profile, that contribution was remunerated
at a higher rate than the contribution at issue.

202    The Commission and the interveners oppose those arguments.

Findings of the Court

203    In the first place, as regards the applicant’s argument that the range applied by the Commission is incorrect because it is
based on transactions which cannot be compared with the contribution at issue, suffice it to note that an examination of the
classification of the contribution at issue reveals that the Commission did not make a manifest error of assessment in finding
that the contribution at issue had more in common with silent partnership contributions than with share capital (see paragraph
181 above).

204    In the second place, as regards the Commission’s review of the question whether the initial remuneration of the contribution
at issue is in line with the market, the applicant’s argument that the Commission did not take into account the market environment
at the date of the contribution at issue must be rejected at the outset. It must be held that, even if no account is taken
of the five transactions in 1999 referred to by the Commission, it follows from a review of the five remaining transactions
that the market range of 75 to 160 basis points established by the Commission remains unchanged, since the transactions at
the upper limit (Bayerische Hypo- und Vereinsbank contribution of DEM 1.2 billion) and lower limit (second tranche of the
contribution of USD 700 million issued by Deutsche Bank) of that range both occurred in 1998. As regards the applicant’s allegation
that those contributions cannot, however, be compared to the contribution at issue because they were of limited duration,
it must be borne in mind that that is not a characteristic that precludes any comparison.

205    Next, the Court must consider each of the eight factors which the applicant regards as requiring a premium to be put on the
market range of basic liability remuneration and which the Commission either assessed incorrectly or failed to consider.

206    As regards, first of all, Helaba’s financial situation, the applicant states that Helaba’s profits in 1998 were relatively
low in the light of the amount of remuneration which had to be paid to the *Land*, as a result of which there was a danger that the profits would not be sufficient to pay the remuneration agreed. It further
submits that Helaba’s other financial statistics (return on capital, distribution of profits, core capital ratio) were consistently
significantly lower than those of the private banks between 1984 and 1994.

207    In that regard, it must be held that, by its argument relating to Helaba’s allegedly reduced profits in comparison with the
level of remuneration, the applicant reiterates the argument concerning the risk of loss of remuneration set out in paragraph
161 above. However, as has been established in paragraph 163 above, the applicant’s comparison between the remuneration required
to be paid by Helaba from 2003 and its profits in 1998 does not show that there is a particular risk of loss of remuneration.
Concerning the argument that Helaba’s other results were lower than those of the major private banks, it is sufficient to
note that, although the contribution at issue was negotiated and transferred to Helaba at the end of 1998, the applicant refers
to data concerning the period from 1984 to 1994. In those circumstances, it must be held that the applicant’s arguments do
not permit the inference that the Commission made a manifest error of assessment in failing to find that, owing to Helaba’s
financial situation, the remuneration should have been higher than was agreed.

208    Second, as regards the absence – largely – of any publicity, owing to the fact that Helaba obtained the contribution at issue
from a single investor, the applicant submits that the damaging effect of publicity in the event of difficulties or changes
in relation to the contribution can be avoided or at least controlled in the present case. It maintains that a private investor
would have required a premium on the basic liability remuneration to offset that advantage.

209    It must be held that that brief assertion by the applicant is not sufficient to demonstrate that, on the market, the matter
alleged actually entails a premium on the basic liability remuneration and that, as a result, the Commission made a manifest
error of assessment in failing to declare such a premium in the present case. Furthermore, while it follows in particular
from the parties’ references to a silent partnership contribution taken up by an insurance company that private investors
also can subscribe to the whole of a silent partnership contribution, the applicant does not put forward any evidence to show
that such a premium is actually required on the market.

210    In addition, as the applicant itself recognises, the fact that the contribution at issue comes from a single investor does
not mean that Helaba can evade all publicity. Helaba cannot prevent the *Land* from raising any difficulties or changes in relation to the contribution, particularly since such issues are liable to be
discussed publicly within the Hessischer Landtag (Parliament of the *Land*), in the same way as the initial subscription of the contribution at issue was discussed.

211    Third, as regards Helaba’s allegedly lower transaction costs, the applicant claims that, owing to the fact that Helaba obtained
the contribution from a single investor, it makes significant cost savings in respect of the launch of the issue as well as
of its administration and implementation. It submits that a private investor would also have required a premium on the basic
liability remuneration to offset that advantage.

212    It must be held that the applicant’s unsubstantiated statement does not demonstrate that, on the market, the matter alleged
would have resulted in a premium on the basic liability remuneration. In addition, the *Land* observes that it also made significant cost savings by transferring the entire special fund to Helaba instead of dividing
the contribution at issue between different banks and that, as a result, a premium is not justified. In those circumstances,
this argument also does not permit the inference that the Commission made a manifest error of assessment in failing to find
that a remuneration premium should be applied for that reason.

213    Fourth, as regards the volume of the transaction, the applicant objects to the Commission’s assessment that the fact that
the volume of the contribution at issue is considerably higher than that of the contributions used for comparison purposes
does not have to result in a premium since the contribution at issue is, by virtue of the phased model, equivalent to a series
of five smaller contributions. It further submits that the Commission contradicts the line of argument which it had developed
in the judicial proceedings culminating in the *WestLB* judgment, cited in paragraph 7 above, in which it had stated that an investor operating in a market economy who is ‘confronted
with what, in practice, are abnormally elevated sums [would have] required a premium on [the] return’.

214    The applicant repeats the arguments which it advanced against acceptance of the phased model. However, it is apparent from
paragraph 131 above that the Commission did not make a manifest error of assessment in taking the view that the contribution
at issue could be compared to a series of five smaller silent contributions, so far as the calculation of the appropriate
remuneration for the expansion of competitive business is concerned.

215    In any event, it must be held that, even without taking the phased model into account, it does not follow from a review of
the transactions which the Commission took into account in recital 164 to the contested decision that the large volume necessarily
necessitates a premium on the liability remuneration. Thus, a liability remuneration of 1.20% was fixed for the SGZ-Bank contribution
(October 1998) of only DEM 50 million (approximately EUR 25 million), whereas Deutsche Bank paid a liability remuneration
of only 0.75% and 0.8% for the tranches of its contribution of USD 700 million (January 1998).

216    Concerning the argument put forward by the Commission during the judicial proceedings culminating in the *WestLB* judgment, cited in paragraph 7 above, suffice it to recall that the decision at issue in that case was annulled by the Court
and that, in the 2004 WestLB decision, the Commission did not impose the premium on account of the large volume of the transaction
which it had previously tried to justify.

217    In those circumstances, it must be held that the applicant has not demonstrated that the Commission made a manifest error
of assessment in failing to find that the remuneration should have been higher than was agreed, on account of the overall
volume of the contribution at issue.

218    Fifth, as regards the share capital buffer, the applicant takes the view that, although the Commission found in recital 169
to the contested decision that the size of the contribution at issue as against the share capital was such that the remuneration
for that contribution is in the upper part of the market range for basic liability remuneration, it should have taken into
account also the fact that the entire contribution was regarded as core capital above the 15% limit of hybrid core capital
instruments laid down by the Sydney Declaration, and that this was the case with regard to Helaba, as opposed to the group
to which it belongs.

219    It must be held that, in so far as recognition of the entire contribution as core capital of Helaba was made possible by its
permanent nature, there is no reason to conclude that the matter alleged by the applicant necessitates a separate premium
from that relating to its unlimited duration. As regards the fact that the contribution at issue was recognised as core capital
of Helaba, as opposed to the group to which it belongs, it must be borne in mind that the applicant confines itself to stating
that that recognition gives Helaba greater flexibility in its use of the funds. Having regard to the Commission’s wide discretion
in the determination of market remuneration, it must be held that that allegation cannot in any way demonstrate that there
was a manifest error of assessment on the part of the Commission.

220    Therefore, it must be held that the applicant’s arguments do not permit the inference that the Commission made a manifest
error of assessment in failing to conclude that the remuneration should have been higher than agreed, on account of the smaller
share capital buffer.

221    Sixth, as regards Helaba’s long-term rating, the applicant criticises the Commission’s assessment in recital 171 to the contested
decision that a private investor would take the view that the risk of loss with Helaba is comparable to that of an investment
in one of the major private banks referred to in that decision. It states that it is inconceivable that, disregarding State
guarantees, Helaba’s rating and the rating of the major private banks referred to in the contested decision should be comparable
and, therefore, that the reference transactions can be used for comparison purposes without any modification. It submits,
moreover, that the Commission did not give reasons for its assessment in that regard.

222    It must be noted that the applicant merely states – in support of its assertion that it is inconceivable that, without State
guarantees, Helaba’s long-term rating and that of the major private banks referred to in the contested decision should be
comparable – that, if Helaba’s ratios had been compared to those of the major private banks, it would ‘presumably’ have obtained
a less favourable rating.

223    Furthermore, the applicant does not challenge the assertion of the Federal Republic of Germany – to which the Commission refers
in the contested decision (recital 171) – that no methodology for calculating the regional banks’ long-term rating, disregarding
institutional liability and guarantor liability, existed before 2001 at the earliest. It is true that, in its reply, the applicant
maintains that, if those State guarantees are not taken into account, Helaba’s rating in 1998 and in 1999 was lower than that
of the major private banks, and it relies in that respect on Helaba’s intrinsic and financial strength ratings, comparing
them to the private banks’ ratings in those years. However, given that it is apparent from the document provided to support
that assertion that intrinsic and financial strength ratings are different from long-term ratings, the mere reference to Helaba’s
lower ratings is not sufficient to demonstrate, in the absence of other details, that its long-term rating would necessarily
have been lower than that of the major private banks if it had been determined without regard to State guarantees, or that
there was, at the end of 1998, a means of determining such a rating in respect of Helaba.

224    In those circumstances, it must be concluded that the applicant does not demonstrate that the Commission made a manifest error
of assessment in assuming that, in the absence at the end of 1998 of a specific methodology for calculating the regional banks’
long-term rating, disregarding State guarantees, a private investor would have taken the view that the risk of loss with Helaba
was comparable to that of an investment in one of the major private banks referred to in that decision.

225    Furthermore, the contested decision contains an adequate statement of reasons in that regard. It must be noted that the assessment
by the Commission to which the applicant objects did not purport to deny the relevance of any remuneration premium, but concerned
the reduction sought by the Federal Republic of Germany on account of the allegedly low level of risk associated with an investment
in Helaba owing to the State guarantees. This explains why the Commission confined itself to indicating why the calculation
of the remuneration did not have to be based on Helaba’s long-term rating at the end of 1998 and does not concentrate on the
precise rating which it would have had without State guarantees.

226    Seventh, as regards the fact that the entire contribution was taken up by a single investor, the applicant submits that, in
the reference transactions, the silent partnership contributions were taken up by a number of investors, each investing, in
general, between EUR 5 million and EUR 10 million or, but only exceptionally, up to EUR 100 million. It states that, although
the *Land* acquired 40% of Helaba’s own funds, in the reference transactions, the share of individual investors in the own funds of
the banks concerned was less than 1%.

227    The applicant disputes the Commission’s assertion in its defence that the distinction made according to each investor’s share
of the issue is completely unfounded when compared with market practices at the end of 1998. It submits in that regard that
that assertion is at odds with the case-law of the Court, which held in *WestLB*, cited in paragraph 7 above (paragraph 255), that a private investor ‘wishes to maximise his profits but without running
excessive risks in comparison with other participants in the market’. It maintains that, in comparison with other market operators,
an investor runs a much greater risk if he is the sole investor in an issue, particularly if the total volume of that issue
is substantial, than by subscribing – as in the case of the German private bank transactions referred to by the Commission
for comparison purposes – jointly with other market participants to a much smaller tranche of an issue which, moreover, has
a smaller total volume.

228    It further submits that the contribution at issue considerably raises the risk profile of the *Land*’s portfolio, owing to the concentration of risk in just one debtor. It observes in that regard that the diversification of
risk is a general principle of commercial risk management and that the supervisory rules relating to ‘large risks’ proceed
on the principle that the concentration of risk in a single debtor is particularly dangerous.

229    It must be observed in that regard that, although subscription to the whole of a contribution representing 40% of the issuing
bank’s own funds represents a greater risk for the investor than subscription to less than 1% of those funds, a remuneration
premium is justified only if that factor constitutes an advantage for the issuing bank for which it is prepared to pay, or
if that bank needs the funds proposed by the investor and is not in a position to obtain them from others. By contrast, while
the increase in risk for the investor stems from a decision which he has taken for his own reasons, without being influenced
by the bank’s wishes or requirements, the bank will refuse to pay a remuneration premium and will obtain funds from other
investors (see, to that effect, *WestLB*, cited in paragraph 7 above, paragraph 320).

230    In the present case the increase in risk which, for the *Land*, lies in the fact that it has a significant proportion of Helaba’s own funds, is the result of its decision not to divide
the special fund because of the disadvantages that that would entail, and not the interest of Helaba which, as has been established
(see paragraphs 39 to 42 above), did not need a significant increase in its funds so urgently as to be persuaded to accept
a remuneration premium.

231    Furthermore, there is no reason to conclude that Helaba would have been unable to obtain on the market, from a number of investors
if necessary, funds in the amount of the contribution at issue, taking into account the phased model, on terms that would
also allow them to be recognised as core capital and in return for a basic liability remuneration equivalent to the rate agreed
by the *Land* and Helaba.

232    Consequently, while the size of the *Land*’s proportion of the core capital of Helaba entailed an increase in risk for the *Land*, it is not clear that that amounted to an advantage for which Helaba should have paid a premium. In those circumstances,
it must be concluded that the Commission did not make a manifest error of assessment in failing to conclude that the remuneration
should have been higher than was agreed, on account of the fact that the contribution at issue was taken up by a single investor.

233    Eighth, as regards the lack of fungibility of the contribution at issue, or its reduced fungibility, the applicant submits
that that factor distinguishes the contribution at issue from the transactions used by the Commission for comparison purposes,
since the *Land*was thereby precluded from withdrawing its investment.

234    In that regard, it must be noted, as in paragraph 229 above, that the fact that one aspect of the transaction entails an increase
in the risk run by an investor does not justify an increase in the remuneration unless that aspect constitutes an advantage
for the bank or the bank is not in a position to refuse the funds proposed.

235    In the present case, the lack of fungibility of the contribution at issue, or its reduced fungibility, does not entail any
advantage for Helaba.

236    It is apparent from the documents before the court that the silent partnership contributions issued on the market are issued
via a company which takes up the contribution as a silent partner and raises the necessary capital on the market. The investors
do not, therefore, take up the silent partnership contribution directly from the issuing bank but from the intermediary company.
The latter, by contrast, as a silent partner, may not transfer its rights in the silent contribution without the consent of
the issuing bank.

237    In the circumstances of the present case, the *Land*, which already had capital to invest, participates in the transaction as a silent partner instead of as an intermediary company.
As a result, for Helaba, the transaction proceeds in the same way as contributions that are issued on the market, and it derives
no additional advantage from the fact that the contribution at issue is not listed on the stock exchange, since the only relevant
characteristics as far as Helaba is concerned are those which allow the contribution to be regarded as core capital above
the 15% limit laid down by the Sydney Declaration for hybrid core capital instruments, namely the unlimited duration, the
silent partner’s lack of entitlement to withdraw the contribution and the absence of a step-up clause. It must be noted in
that regard that, when questioned by the Court at the hearing in relation to the advantages which Helaba derived from the
contribution at issue not having been listed on the stock exchange, the applicant confirmed that it did not know whether that
aspect did in fact constitute an advantage for Helaba.

Conclusion concerning the comparison of the basic remuneration with the basic liability remuneration required on the market

238    It follows from all the foregoing that, in the circumstances of the present case, the Commission was entitled to conclude,
without making a manifest error of assessment, that a private investor in a similar situation to that of the *Land* would not have been able to obtain a higher initial remuneration from Helaba than was agreed between the parties, since the
matters involving an increase in risk for the *Land* arise from the nature of its special fund and from its decisions, and do not represent any advantage for Helaba in comparison
with what it could have obtained on the market. In those circumstances, the Commission did not make a manifest error of assessment
in finding that the total expense to Helaba of 1.43% arising on the basis of the initial remuneration of the contribution
at issue, taking into account the effect of the trade tax, did not give Helaba an advantage which it would not have been able
to obtain under market conditions.

c)     The comparison of the perpetuity premium with the liability remuneration premium required on the market

The contested decision

239    In the contested decision, the Commission found that the contribution at issue differs from most of the transactions referred
to by the Federal Republic of Germany in that it constitutes a ‘perpetual’, and took the view that that merits a remuneration
premium since it means that the *Land*is faced with an increased risk of being unable to follow variations in interest rates and, for Helaba, the added economic
benefit of being able to exceed the 15% cap fixed by the Sydney Declaration (recitals 173 and 174 to the contested decision).

240    The Commission states that, in assessing whether the 0.23% rate – corresponding to the perpetuity premium agreed between the
parties together with the corresponding proportion of the trade tax – is in line with the market, it cannot, or can to only
a very limited extent, rely on market data from the time of the transaction, since the parties were acting in effect as market
pioneers. It asserts, however, that a public investor or a public bank cannot be prevented from acting as a market pioneer
and that it is, therefore, appropriate to examine only whether the determination of the perpetuity premium was manifestly
wrong in economic terms, that is, whether it was based, for example, on false premisses (recitals 176 and 177 to the contested
decision).

241    It states that, in the light of the limited data available for the year of the contribution at issue and the following year,
the calculation put forward by the Federal Republic of Germany, resulting from a comparison of the remuneration for a Deutsche
Bank ‘perpetual’ and a silent partnership contribution of Dresdner Bank, and culminating in a premium of approximately 0.29%,
was plausible. It concluded from this that there was no basis for the view that the relevant comparative rate of 0.23% per
annum for the perpetuity premium lies below the market range and that there was therefore any favouring of Helaba, in other
words State aid (recitals 182 and 183 to the contested decision).

Arguments of the parties

242    The applicant submits that the Commission made a manifest error of assessment in taking the view that there was no need to
modify the reference range calculated on the basis of time-limited silent partnership contributions in order to take account
of the unlimited duration of the contribution at issue.

243    In the first place, the applicant states that the Commission erred in concluding that the *Land* and Helaba acted as pioneers and that, as a result, they had to be given a wider margin of discretion. It maintains that
Helaba and the *Land* did not act as pioneers, since no other transaction with the same characteristics as the contribution at issue was completed
subsequently and, above all, because it is apparent from the debates in the Hessischer Landtag prior to the implementation
of the contribution at issue that the parties sought faithfully to copy transactions carried out between other *Länder* and other Landesbanken, the remuneration for which was deemed by the Commission to contain elements of State aid.

244    In the second place, the applicant submits that the Commission was not entitled to take into account in its examination ‘perpetuals’
from the period May 1999 to December 2003. It maintains in that regard that if no market data are available, the Commission
cannot assume that the circumstances which a private investor would have taken into account in the period from May to July
1999, or in December 2003, already applied, as such, at the end of 1998, since the actual evolution of the European capital
market proves otherwise. It takes the view that, as a result, the transposition of the competitive situation in the year 1999
to the year 1998, without any justification, is a blatant mistake.

245    In the third place, it submits that, in any event, the four transactions – three of which were carried out by Deutsche Bank
and one by Dresdner Bank – which the Commission used for reference purposes to calculate the perpetuity premium are not comparable
to the contribution at issue as regards the total volume and the volume invested by the investor, the proportion of core capital
of the issuing banks accounted for by the various contributions, their recognition as core capital of the bank or of the group,
and the possibility of withdrawing the investment.

246    In the fourth place, the applicant submits that, contrary to the Commission’s claim, the larger premium applied to the remuneration
of the Deutsche Bank ‘perpetual’, as against the silent partnership contribution of Dresdner Bank, cannot be justified by
the more favourable rating of the ‘perpetual’. The applicant explained in reply to a question put by the Court at the hearing
that it intended, by that argument, to submit that the less favourable rating of the Deutsche Bank ‘perpetual’, as against
that of the time-limited silent partnership contribution of Dresdner Bank, did not permit the inference that the market perpetuity
premium was below the 0.29% rate calculated by comparing the three transactions, since ratings are affected by many factors.

247    The Commission and the interveners oppose those arguments.

Findings of the Court

248    With regard, in the first place, to the applicant’s argument that the *Land* and Helaba were not pioneers, since they merely sought to copy the earlier transactions of the Landesbanken, first, it must
be noted that – as Helaba points out – it is not borne out by the transcript of the meeting of the Hessischer Landtag’s Economics
Committee on 2 December 1998 on which the applicant relies. Admittedly, it is apparent from that document that those transactions
were taken into account, but it is equally apparent that the *Land* and Helaba also took into account the fact that the Commission had initiated proceedings in respect of those transactions
and that discussions had taken place with a view to reaching agreement on the terms of the contribution at issue. Second,
concerning the argument that no other transaction comparable to the contribution at issue was completed subsequently, it is
sufficient to refer back to the preceding analysis of the classification of the contribution at issue and to the account taken
of its differences for the purposes of determining the market remuneration.

249    As regards, in the second place, the applicant’s argument that the Commission was not entitled to take into account ‘perpetuals’
dating from May 1999 to December 2003, it must be observed that the Commission could not challenge the perpetuity premium
agreed between the *Land* and Helaba without a minimum of information to support its conclusion that that premium was below market rate. It was with
a view to finding that information, and thus to limiting the discretion of the parties to the contribution at issue, that
the Commission examined the subsequent market trend. In those circumstances, the applicant’s objection, aimed at preventing
the Commission from using data relating to the period after the contribution at issue, is not capable of demonstrating that
the Commission made a manifest error of assessment in concluding that there was no basis on which to take the view that the
perpetuity premium agreed between the *Land* and Helaba was not in line with the market.

250    In any event, it must be held that the applicant’s argument that the volume of the market in hybrid core capital instruments
increased significantly in 1999 is not sufficient to show that the Commission made a manifest error of assessment in concluding
that it was entitled to rely on transactions carried out after the contribution at issue, since there was no reason to assume
that a remuneration premium for the perpetuity of a silent partnership contribution varied much over time (recitals 177 and
178 to the contested decision). The mere fact that the volume of the market in hybrid core capital instruments increased significantly
in 1999 does not mean that, contrary to the Commission’s assertion in the contested decision, the perpetuity premium was lower
in that year, and therefore that the Commission’s use of data relating to that period could distort its conclusion. Moreover,
the applicant does not explain how the increase in the volume of the market had an effect on the rate of the perpetuity premium.
Nor does the applicant put forward any arguments to show that the *Land* and Helaba were not able legitimately to calculate in December 1998 the amount of the premium which would subsequently be
established by other banks.

251    As regards, in the third place, the complaint that the contribution at issue is not comparable to the four contributions mentioned
by the Commission, the applicant relies on arguments which have already repeatedly been advanced in support of its assertion
that the contribution at issue has a risk profile that precludes its comparison with other silent partnership contributions,
and which have been rejected by the Court.

252    The applicant also states that the fact that the contributions used by the Commission for comparison purposes are listed on
the stock exchange suggests that they are not of unlimited duration from the investor’s point of view and that, as a result,
the increased risk of loss of capital as compared with a time-limited financial instrument is, in so far as it exists, negligible.
By contrast, in the case of the contribution at issue, the *Land* would not be able to withdraw its investment and, as a result, the perpetuity premium ought to be higher than in the case
of silent partnership contributions listed on the stock exchange.

253    It must be noted, however, that the difference in the degree of fungibility between the contributions used by the Commission
for comparison purposes and the contribution at issue and, in consequence, in the possibility of withdrawal of the investment
is merely a product of the fact that the *Land*, unlike investors in silent partnership contributions listed on the stock exchange, did not invest liquid – and thus fungible
– assets, but a special fund which it did not wish to sell and for which it wanted to be reimbursed only in kind. Furthermore,
the inability – or very limited ability – of the *Land*to withdraw its investment does not give Helaba an additional advantage which it should therefore remunerate.

254    Consequently it must be held that, in the present case, in negotiations under normal market conditions, it would have been
impossible for a private investor in the same situation as the *Land* to disregard the fact that the inability – or limited ability – to withdraw the investment was the product of its decisions
in relation to the administration of the special fund and not of Helaba’s requirements. Thus, such an investor should have
taken into consideration Helaba’s point of view and the fact that Helaba would not be prepared to pay a higher remuneration
for a disadvantage to the *Land* resulting from its own decisions and not amounting to an additional advantage for Helaba.

255    As regards, in the fourth place, the applicant’s argument that the less favourable rating of the Deutsche Bank ‘perpetual’
as compared with that of the time-limited silent partnership contribution of Dresdner Bank precludes a reduction of the perpetuity
premium calculated by comparing those transactions, it must be held that the Commission did not deem the calculation proposed
by the Federal Republic of Germany to be correct; it merely confirmed that it was plausible. Furthermore, the applicant’s
argument effectively prevents the Commission from making any market comparison in the present case since, as it acknowledged
at the hearing, the remuneration of any transaction completed on the market depends on a number of factors, including the
effect on the final remuneration which is difficult to quantify precisely.

256    In any event, it must be observed that, since the Commission’s conclusion in relation to the perpetuity premium that was agreed
in the present case is not based on that calculation alone, that argument cannot, even if well founded, demonstrate that that
conclusion is manifestly wrong. As stated in paragraphs 240 and 241 above, the Commission took into account in particular
the fact that the *Land* and Helaba were acting as market pioneers and, alternatively, the fact that the comparison of the remuneration of ‘perpetuals’
mentioned by the Federal Republic of Germany was not evidence that the range of remuneration of ‘perpetuals’ was higher than
that of time-limited silent partnership contributions.

257    In the light of all the foregoing, it must be held that the applicant has not established that the Commission made a manifest
error of assessment in concluding that there was no evidence that the relevant comparative rate of 0.23% per annum for the
perpetuity premium was below the market range and that, as a result, Helaba was treated more favourably and was thus in receipt
of State aid.

Conclusion on the examination of the market nature of the liability remuneration

258    It is apparent from the foregoing that the Commission did not make a manifest error of assessment in concluding that the cost
borne by Helaba on account of the contribution at issue was in line with the liability remuneration agreed on the market in
respect of comparable transactions and, therefore, did not confer an advantage on Helaba which it would not have obtained
under normal market conditions.

5.     *The Commission’s deduction from the remuneration of the refinancing costs arising for Helaba from the lack of liquidity of
the contribution*

a)     The contested decision

259    The Commission states that, given that the contribution at issue did not provide Helaba with liquidity, Helaba bore additional
refinancing costs as compared with those which a bank in receipt of a liquid contribution would have had to bear, since Helaba
still had to obtain such liquidity on the market in order to be able to expand its business in the same way (recital 184 to
the contested decision). It takes the view, therefore, that Helaba was required to remunerate only the risk to which the *Land* exposed its funds, that is to say, that it was required to pay the *Land* only the liability remuneration above the interbank refinancing interest rate applicable (recitals 162 and 187 to the contested
decision).

260    The Commission rejects the applicant’s argument that only the net refinancing costs had to be deducted from the remuneration,
stating that, unlike the WestLB case referred to by the applicant, the contribution at issue does not provide Helaba with
an additional tax reduction, as compared with that provided by a liquid contribution, which would justify a lesser reduction
(recitals 185 and 186 to the contested decision).

b)     Arguments of the parties

261    The applicant submits that the contested decision is vitiated by a failure to state reasons and, moreover, that it is incompatible
with the private investor test.

262    As regards the failure to state reasons, the applicant submits that the full deduction of the refinancing rate conflicts totally
with the Commission’s stance in the decision initiating the formal investigation procedure and with the case-law of the Court,
and maintains that, that being the case, the Commission should have devoted particular care to the statement of reasons for
its decision. It submits that the contested decision does not disclose the criteria on which the Commission relied in concluding
that Helaba was actually bearing additional refinancing costs up to the gross refinancing rate, why Helaba has to pay only
the liability remuneration above the reference interest rate, whether the liability remuneration should be applied to the
gross refinancing rate or to the Libor or Euribor rates, or whether the reference rate and the Libor rate are the same.

263    As regards the application of the private investor test, the applicant submits that, in taking the view that Helaba only has
to pay for the risk to which the *Land* exposes its special funds by opting for the legal form of a silent partnership contribution, the Commission’s application
of the test was erroneous because (i) the lack of liquidity would already have been offset by the reduced transfer value of
the special fund; (ii) a private investor would not accept that his remuneration should be reduced on account of the lack
of liquidity of his investment; and (iii) in any event the Court has already had occasion to rule that a private investor
would accept only a reduction up to the actual costs borne by the bank on account of the lack of liquidity.

264    The Commission and the interveners oppose those arguments.

c)     Findings of the Court

265    As regards the alleged failure to state reasons, it follows from recitals 184 to 187 to the contested decision that the Commission
took the view that a bank incurs higher costs on account of the fact that an investment in core capital is not liquid, as
compared with the costs associated with a liquid investment, since the bank has to procure a level of liquidity on the market
equivalent to the value of the investment. The bank would not, therefore, accept that investment unless the agreed remuneration
took account of the additional costs arising from the lack of liquidity of the investment and, accordingly, ensured that the
costs of such an investment were the same as the costs of an investment including the transfer of liquid assets.

266    Where, as in the case of silent partnership contributions such as the contribution at issue, both the remuneration for the
contribution and the additional costs are paid before tax, the Commission takes the view that the costs of a liquid and of
a non-liquid contribution cannot be the same unless the remuneration for the contribution is calculated without taking account
of the interest rate which, in the case of liquid silent partnership contributions, is intended to remunerate the availability
of liquidity. However, where, as in the WestLB case, the remuneration for the investment is paid after tax because the investment
is not in the form of a silent partnership contribution, although the refinancing costs are always deemed to be business expenses
and are paid before tax, only the net refinancing costs may be taken into account since, in the opposite case, the non-liquid
investment would be less onerous for the bank than a liquid investment. In the latter case, the Commission takes the view
that an investor would require his remuneration to be higher to offset that advantage for the bank.

267    It must be held that the Commission has adequately explained – including in the light, inter alia, of the WestLB case – why,
in its opinion, Helaba is, in the present case, effectively bearing the additional refinancing costs up to the gross refinancing
rate, as compared with a liquid silent partnership contribution, and, therefore, why Helaba has to pay only the liability
remuneration above the reference interest rate. Furthermore, in the light of that reasoning, it was not necessary for the
Commission to indicate whether the liability remuneration should have been applied to the gross refinancing rate or to the
Libor or Euribor rates, or what the reference rate would have been.

268    As regards the applicant’s arguments concerning the justification for the deduction of the financing costs, these must be
examined separately.

The argument that the lack of liquidity was already taken into account via the reduced transfer value

269    The applicant submits in this regard that, although the portfolio of special fund loans amounted to approximately EUR 4 billion
as at 31 December 1998, the silent partnership contribution entered on Helaba’s balance sheet amounted to only EUR 1.264 billion.
It submits that the determination of the cash value made the contribution at issue the same as any other type of asset, including
liquid assets, of the same amount, particularly in so far as it was supposed to produce interest at the normal market rate.
It infers from this that a private investor would take into account the income which Helaba draws from the increase in the
value of the special fund and would place it alongside any refinancing costs borne by the bank.

270    It must be observed that, as the Commission states, the valuation of the special fund as at the date of its transfer to Helaba
has no connection with the additional costs which the contribution at issue represent for Helaba over and above those of a
liquid silent partnership contribution. The fact that the valuation of the special fund was carried out not only by the parties
to the contribution at issue but also by BAKred – in order to establish the value to be entered on Helaba’s balance sheet
as core capital – clearly shows that no account was taken in that valuation of the disadvantages caused to Helaba by the lack
of liquidity and the costs of the refinancing which it had to undertake in order to expand its business as much as possible.
That value, which was calculated in order to protect third party creditors, is thus the same, irrespective of whether Helaba
should decide actually to expand its business as much as possible or not. It is thus an objective value which does not depend
on the use of the special fund. That value would be the same whether the fund had been sold to a private undertaking or to
a public authority simply wishing to carry on the business of the special fund and which, therefore, would not have needed
to obtain liquidity up to the value of the fund.

271    Furthermore, that conclusion is borne out by the expert report requested by the Commission during the administrative procedure
in the WestLB case. The example given by that report, concerning the sale by the authorities of the United Kingdom of Great
Britain and Northern Ireland of property rented to military personnel at less than market rents, the purchase price of which
was equal to the cash value, confirms that that value corresponds to the objective sale price, irrespective of the buyer’s
intended use of the fund transferred.

272    The fact, which is noted in that report and relied on by the applicant in the present case in challenging the deduction of
refinancing costs, that, once the cash value has been determined, the funds transferred are supposed to produce interest at
market rates may be correct but cannot preclude such a deduction. First, it follows from the use of the expression ‘is supposed’
in that report that it is an opinion and not an incontrovertible fact which may be taken into account in offsetting the refinancing
costs. Thus, it cannot be ruled out that, some years after its initial valuation, the cash value of the fund may not be equal
to that initial value together with outstanding interest, but may be lower because, for example, of the non-repayment of part
of the loans granted. Second, it follows from the contested decision, in particular from recitals 18 and 30, that the value
of the fund entered on the balance sheet remained stable between 1999 and 2003 and that the transfer of the special fund to
Helaba does not mean an influx of liquidity or of revenue for the bank, since the payments relating to the construction of
social housing are allocated to the special fund and must be used to provide assistance. It follows from this that the fact
that the cash value of the special fund is below its nominal value does not mean that Helaba makes an annual gain.

273    Accordingly, it must be concluded that, as the Commission and the interveners maintain, the fact that the cash value of the
special fund on the date of its transfer is – as the parties and BAKred acknowledge – lower than its nominal value does not
offset, and is not intended to offset, the financing costs borne by Helaba to procure liquidity on the market up to the amount
of the contribution at issue. This argument must therefore be rejected without the Commission being required, as the applicant
suggests, to supply the two expert reports determining the current value of the contribution at issue that are referred to
in recital 16 to the contested decision.

The argument that a private investor would not have accepted a deduction of refinancing costs

274    The applicant submits that, in taking the view that a private investor would accept a reduction of his remuneration on account
of the non-liquid nature of his contribution, the Commission made two errors – an accounting error, and a macroeconomic error.

275    The accounting error lies in the link established between the *Land*’s decision to transfer its special fund and Helaba’s decision to accept it. The applicant claims that each decision was governed
by parameters – likely return, risk, refinancing costs – which are not set by the parties but by the capital market, and that
an investor will not proceed with his contribution without expecting a return appropriate to the risk taken. As regards the
Commission’s objections that the applicant’s reasoning is based on a ‘separation theory’ which, aside from the fact that it
is not the only theory to have been formulated, conflicts with the private investor test, the applicant submits that there
is only one ‘separation theory’ and that the private investor test not only does not conflict with it but is based upon it.

276    The macroeconomic error lies in the fact that the Commission concluded that a private investor would have made part of his
assets available to Helaba’s creditors for an unlimited period at a rate of 1.4%, which is not only much lower than the risk-free
borrowing rate at that time – namely 4% – but, moreover, does not even match the long-term inflation rate. The applicant also
challenges the Commission’s assertion that the remuneration rate was below that of a liquid contribution because it was not
an ordinary contribution. It submits in that regard that there is nothing unusual about the contribution at issue in so far
as contributions are often made in kind, such as in the form of property, land or production facilities.

277    In that regard, it follows from the *WestLB* judgment, cited in paragraph 7 above, that, with regard to the classification of an investment in an undertaking as State
aid, it cannot be contended that, when calculating the appropriate return, only the investor’s point of view is relevant.
The Court thus considered that, in the course of negotiations under normal conditions of a market economy, it would have been
impossible for a private investor in the same situation as the *Land* of North-Rhine Westphalia to ignore the non-liquidity of the capital contributed and the fact that, for WestLB, that capital
was of limited use. It had therefore concluded that the *Land* of North-Rhine Westphalia could not have required the same return on that capital as for liquid capital (*WestLB*, cited in paragraph 7 above, paragraphs 326 and 328). It must, moreover, be borne in mind that, in the application of the
law on State aid, it is the existence of an advantage for the undertaking that is decisive. It follows from this that, in
a case such as the present case, where the *Land* seeks to invest a particular type of asset, a transaction cannot be deemed to give rise to State aid where, following negotiations
between the public authority wishing to invest and the undertaking, the terms which the latter is prepared to accept on account
of the disadvantages facing that undertaking because of the nature of the capital transferred result in a remuneration that
is lower than that agreed on the market for cash investments. In so far as those terms are not more advantageous for the undertaking
than those which it could have obtained if the transaction related, as would normally be the case, to liquid capital, it does
not gain an advantage which it would not have been able to obtain on the market. By contrast, it cannot be held that, for
a transaction of that kind not to be regarded as giving rise to State aid, the public authority must always receive the same
remuneration for its investment as an investor who is prepared to transfer liquid capital.

278    In those circumstances, the applicant’s arguments relating to inflation and the risk-free borrowing rate must be rejected
in so far as they are based on the premiss that it is only the investor’s point of view that counts and that all that is relevant
is the comparison between the remuneration received by the *Land* and that which would have been required by an investor assuming the same risks, irrespective of the advantages and disadvantages
for Helaba arising from the contribution at issue as compared with the reference transactions.

279    That conclusion is unaffected by the applicant’s argument that there is nothing unusual about the contribution at issue inasmuch
as contributions in kind, such as property, land or production facilities, are common. In that regard, on the one hand, it
must be noted that the applicant does not claim that hybrid core capital instruments such as the contribution at issue are
taken up on the market in exchange for assets such as property or land. On the other hand, that comparison disregards the
fact that the contribution at issue is of a special nature, even in comparison with such assets. Not only is the contribution
at issue not liquid, but Helaba cannot obtain liquidity by selling it or using it for its own gain.

280    In those circumstances, it must be concluded that the applicant’s argument that the rate agreed between the parties to the
contribution at issue is below the risk-free borrowing rate and inflation does not permit the inference that the Commission
made a manifest error of assessment in taking the view that, since the contribution at issue does not provide Helaba with
liquidity, which it must therefore procure on the market, Helaba was required to remunerate the *Land* only in respect of the risk to which the *Land*exposed its assets (liability premium).

The fact that an investor would, at most, have accepted only a deduction of refinancing costs corresponding to the actual
costs borne by Helaba

281    The applicant notes that, thanks to the contribution at issue, Helaba is able to expand its business significantly and submits
that, in consequence, the refinancing costs should not be attributed to one ‘unit of business’ but to the whole of the business
generated by the contribution. It asserts that the Commission should have compared the economic advantages and disadvantages
of a liquid contribution, on the one hand, and the contribution at issue, on the other, and concludes that the non-liquid
nature of the contribution at issue could justify at the very most a reduced return and not a flat-rate deduction of the refinancing
costs. It takes the view, moreover, that the Commission did not take account of the fact that certain transactions do not
require liquidity but generate income for the bank.

282    Furthermore, the applicant takes the view that, even if the full refinancing rate had to be taken into account, the refinancing
costs constitute a business expense which reduces Helaba’s basis of assessment, with the result that Helaba’s actual cost,
after tax, is below the refinancing rate.

283    As regards the applicant’s argument that the Commission should have compared the economic advantages and disadvantages of
the contribution according to whether or not it was in the form of cash, it must be noted that a non-liquid contribution does
not entail additional advantages for a bank as compared with a liquid contribution. Thus, the business expansion opportunity
arising as a result of the increase in own funds, both in respect of business requiring liquidity and that requiring only
liability capital, is the same, irrespective of the nature of the assets transferred to the bank. By contrast, a non-liquid
contribution entails additional costs for the bank, unless the bank enters only into transactions which do not require liquidity.
The applicant does not claim that that is the case so far as Helaba or banks which have issued silent partnership contributions
on the market are concerned. Moreover, in the calculations included in its written statements to demonstrate that Helaba’s
relative economic loss is substantially below the full amount of its costs, the applicant also proceeds on the principle that
the bank will seek to obtain liquidity up to the amount transferred.

284    As regards the applicant’s calculations, moreover, these were made using an example based on a contribution of EUR 100, a
business growth factor of 12.5, a refinancing rate of 4% and a lending rate of 6.6% for Helaba’s customers. The applicant
explains that, in those circumstances, Helaba would make a profit before payment of the remuneration of EUR 36.50 in the case
of a liquid contribution and of EUR 32.50 in the case of a non-liquid contribution, and that, as a result, it makes a loss
of EUR 4 – that is 10.96% – if it receives a non-liquid contribution. It proposes, therefore, to reduce by 10.96% the remuneration
payable for the liquid contribution – namely 5.4%, corresponding to the risk-free borrowing rate of 4% plus the 1.4% liability
premium agreed between the *Land* and Helaba. It concludes, therefore, that the *Land* ought to be paid a remuneration of 4.81%.

285    It must be noted at the outset that these calculations are largely speculative. While the refinancing rate for risk-free loans
used by the applicant is that which applied to 10-year federal bonds in Germany at the time of the contribution at issue,
the fact remains that Helaba will have to pay a higher rate than the federal bond rate in order to obtain refinancing on the
market (see paragraph 13 above). As regards the rate of 6.6%, leaving aside the fact the applicant does not explain in its
pleadings on what that figure is based, it is clear that a bank does not apply just one rate to all transactions, at all times
and for all its customers.

286    In any event, it must be held that the partial deduction of refinancing costs suggested by the applicant only partly offsets
the higher costs which the contribution at issue represents for Helaba as compared with a liquid contribution. While it follows
from the calculation proposed by the applicant that the refinancing costs borne by Helaba in order to obtain liquidity on
the market would be EUR 4 for a loan of EUR 100, the reduction of the remuneration which it would pay to the *Land* would only be EUR 0.59. Therefore, by using the method put forward by the applicant, the cost which Helaba would bear on
account of the contribution at issue would be higher than that which would arise in connection with a liquid contribution.

287    In those circumstances, the applicant’s argument does not prove that the Commission made a manifest error of assessment in
taking the view that the gross refinancing costs were deductible in the present case in order not to make the contribution
at issue more costly for Helaba than a liquid contribution, which a private investor would have been unable to require in
the circumstances of the present case.

288    With regard to the applicant’s argument that the disadvantage caused to Helaba by the refinancing costs is mitigated by the
advantage which it derives from the fact that those costs are expenses which reduce its basis of assessment and therefore
the amount of tax, suffice it to note that, even if that is in fact the case, the profits which Helaba makes after tax are
thus also lower than those which it would have made if the contribution had been liquid. In those circumstances, the non-liquid
nature of the contribution at issue does not represent an advantage for Helaba.

289    The present case must thus be distinguished from the WestLB case in which the Commission – without its action being questioned
by the Court – had approved only the deduction of the net refinancing rate, not the gross rate as demanded by the Federal
Republic of Germany and the parties to the transaction, owing to the fact that, since WestLB – unlike Helaba – was required
to remunerate the investor after tax, it would have made more profit with the transfer of a non-liquid asset than it would
have made with liquid capital.

290    Since the impact of the refinancing costs on the bank’s profits was lessened by virtue of the fact that the reduction of the
basis of assessment meant that less tax was payable, the impact of those costs on the remuneration also had to be reduced
so as not to allow the bank to profit both from the tax reduction and an excessive reduction of the remuneration. Thus, in
deducting from the remuneration the net refinancing costs, the Commission offset the increase in WestLB’s expenses incurred
in connection with those costs and their reduction resulting from the reduction of the remuneration to be paid, making the
transaction similar to a transaction involving a transfer of liquidity.

291    In view of all the foregoing, it must be held that the applicant has not established that the Commission made a manifest error
of assessment with regard to the account taken of the refinancing costs borne by Helaba owing to the non-liquid nature of
the special fund.

292    In those circumstances, it must be held that the applicant has not demonstrated that the Commission made a manifest error
of assessment in concluding, in essence, that the charge borne by Helaba in respect of the part of the contribution which
it was able to use to underpin its competitive business and arising from the agreed remuneration, the trade tax and the refinancing
costs, as well as the charge of 0.3% for the rest of the contribution at issue, was the same as the charge which Helaba would
have borne if it had obtained funds entailing the same advantages on the market. In particular, the Commission did not make
a manifest error of assessment in concluding, in the light of the context of the transaction, that, while the fact that the
*Land* contributed a significant proportion of Helaba’s core capital and cannot freely withdraw its investment may indeed increase
the risk run by the *Land*, it does not represent an additional advantage for Helaba and would not have enabled a private investor to obtain a remuneration
premium.

293    The applicant’s pleas alleging an infringement by the Commission of Article 87 EC and a failure to state reasons for the contested
decision must, therefore, be dismissed.

294    Accordingly, the action is dismissed.

**The parties’ other applications**

295    The applicant asks the Court to order the Commission, in accordance with Article 64(3) of the Rules of Procedure, to produce
(i) the expert report which was lodged by the Federal Republic of Germany during the administrative procedure and relates
to the priority of the contribution at issue in the event of Helaba’s insolvency, and is mentioned in recital 131 to the contested
decision; (ii) the two expert reports establishing the cash value of the contribution at issue mentioned in recital 16 to
the contested decision; and (iii) the agreement or agreements reached between Helaba’s shareholders giving rise to the *Land*’s ‘controlling influence’ to which the Commission referred in its Decision C(2005) 3232 final of 6 September 2005 on the
transfer of the Hessian Investment Fund as silent partnership participation to Landesbank Hessen-Thüringen Girozentrale, at
issue in the case giving rise to the judgment of today’s date in *Bundesverband deutscher Banken* v *Commission*, cited in paragraph 31 above.

296    The applicant also requests the Court to hear the oral testimony of the experts, Mr H. and Mr F.

297    The applicant, moreover, asks the Court to order Helaba to produce statistics in respect of its market share in Hessen, Thuringia
and Germany in the years 1998 to 2004.

298    Lastly, it proposes that a number of witnesses be heard if the Commission challenges certain assertions made by the applicant
in relation to the admissibility of the action.

299    At the request of the Court (see paragraph 25 above), the Commission produced the expert report which was provided by the
Federal Republic of Germany during the administrative procedure and which relates to the priority of the contribution at issue
in the event of Helaba’s insolvency. However, the Court considers that, in view of the explanations given by the parties during
the proceedings, there is no need to request the production of the two expert reports establishing the cash value of the contribution
at issue. With regard to the agreement or agreements reached by Helaba’s shareholders to which the Commission refers in Decision
C(2005) 3232 final, it must be held that, since none of the Commission’s assessments in the contested decision are based on
the *Land*’s influence on Helaba, there appears to be no need for the document to be produced.

300    The Court considers, further, that there is no need to hear the oral testimony of the experts Mr H. and Mr F., since their
reports have already been placed on the file.

301    In addition, in the absence of a ruling on the admissibility of the present action, it is not necessary to approve the applicant’s
request that Helaba be ordered to produce statistics in respect of its market shares in Hessen, Thuringia and Germany for
the years 1998 to 2004, or to summon as witnesses the persons whom the applicant proposed should testify if the Commission
should challenge certain assertions made by the applicant in relation to the admissibility of the action.

302    With regard to the applicant’s application for confidential treatment in respect of the reply (see paragraph 20 above), suffice
it to note that, in so far as the information which the applicant regards as confidential does not appear in the version of
the reply lodged, the application is devoid of purpose.

303    Finally, the application for the removal from the file of certain documents annexed to the reply (see paragraph 22 above)
must be allowed, since the documents concerned are internal documents of the Commission.

**Costs**

304    Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the
costs in accordance with the form of order sought by the Commission, the *Land* and Helaba.

305    In accordance with the first subparagraph of Article 87(4) of the Rules of Procedure, the Federal Republic of Germany is to
bear its own costs.

On those grounds,

THE GENERAL COURT (Fourth Chamber)

hereby:

1.      **Orders the documents produced by the Bundesverband deutscher Banken eV at Annexes 9 and 10 to the reply to be removed from
the file;**

2.      **Dismisses the application;**

3.      **Orders the Bundesverband deutscher Banken to bear its own costs and to pay those incurred by the European Commission, the
Land Hessen and Landesbank Hessen-Thüringen Girozentrale;**

4.      **Orders the Federal Republic of Germany to bear its own costs.**

| Czúcz | Vadapalas | Labucka |
| ----- | --------- | ------- |

Delivered in open court in Luxembourg on 3 March 2010.

[Signatures]

Table of contents

Background to the dispute

A –  The contribution at issue

B –  Cases concerning the German Landesbanken

C –  The contested decision

Procedure and forms of order sought by the parties

Law

A –  Admissibility

B –  Substance

1.  Context in which the contribution at issue was negotiated

2.  Taking the phased model into account

a)  The contested decision

b)  Arguments of the parties

c)  Findings of the Court

3.  The complaint that the Commission incorrectly classified the contribution at issue as a ‘normal’ silent partnership contribution
instead of as an investment in share capital

a)  The contested decision

b)  Arguments of the parties

c)  Findings of the Court

The characteristics on which the Commission based its view that the remuneration for the contribution at issue had to be compared
to remuneration for time-limited silent partnership contributions

–  Risk of loss in the event of insolvency or liquidation

–  Profitability profile

The characteristics of the contribution at issue which the Commission regarded as not precluding a comparison of remuneration
for the contribution at issue with the remuneration for time-limited silent partnership contributions

–  Volume

–  Share capital buffer

–  Perpetuity of the contribution and the inability to transfer it

Characteristics of the contribution at issue not relied on during the administrative procedure or considered in the contested
decision

The market situation at the time of the transfer of the contribution at issue

Conclusion as to the classification of the contribution at issue as a silent partnership contribution

4.  Comparison of the remuneration for the contribution at issue with the liability remuneration required on the market

a)  Taking the trade tax into account

The contested decision

Arguments of the parties

Findings of the Court

b)  Comparison of the initial remuneration with the basic liability remuneration required on the market

The contested decision

Arguments of the parties

Findings of the Court

Conclusion concerning the comparison of the basic remuneration with the basic liability remuneration required on the market

c)  The comparison of the perpetuity premium with the liability remuneration premium required on the market

The contested decision

Arguments of the parties

Findings of the Court

Conclusion on the examination of the market nature of the liability remuneration

5.  The Commission’s deduction from the remuneration of the refinancing costs arising for Helaba from the lack of liquidity
of the contribution

a)  The contested decision

b)  Arguments of the parties

c)  Findings of the Court

The argument that the lack of liquidity was already taken into account via the reduced transfer value

The argument that a private investor would not have accepted a deduction of refinancing costs

The fact that an investor would, at most, have accepted only a deduction of refinancing costs corresponding to the actual
costs borne by Helaba

The parties’ other applications

Costs

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- Language of the case: German.