# C_2011271EN.01002001.xml

| 14.9.2011 | EN | Official Journal of the European Union | C 271/20 |
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14.9.2011

EN

Official Journal of the European Union

C 271/20

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STATE AID — GERMANY

State aid MC 12/10 — Sparkasse KölnBonn divestments to the City of Cologne

(Articles 107 to 109 of the Treaty on the Functioning of the European Union)

(Text with EEA relevance)

2011/C 271/08

The Commission notified Germany by letter of 30 March 2011 of its sui generis decision regarding the aid MC 12/10.

TEXT OF LETTER

‘I.   PROCEDURE

| (1) | By decision of 29 September 2010, the Commission approved capital injection measures of EUR 650 million in favour of Sparkasse KölnBonn (“the Bank”) in case C 32/09 (“SpKB Decision”) (1). That approval was subject to a number of commitments made by Germany. One of the commitments was that the Bank would sell its stakes in 11 real estate subsidiaries (“the subsidiaries”) by the end of March 2011. |
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(1)

By decision of 29 September 2010, the Commission approved capital injection measures of EUR 650 million in favour of Sparkasse KölnBonn (“the Bank”) in case C 32/09 (“SpKB Decision”) (1). That approval was subject to a number of commitments made by Germany. One of the commitments was that the Bank would sell its stakes in 11 real estate subsidiaries (“the subsidiaries”) by the end of March 2011.

| (2) | On 6 December 2010, Germany informed the Commission that it will not be possible to divest the subsidiaries within the committed time frame. On 2 February 2011, Germany notified a request for an extension of the divestment period until 31 October 2011. On 23 February 2011, Germany submitted further information demonstrating that the Bank had done everything possible to conclude the sales process within the committed deadline. |
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(2)

On 6 December 2010, Germany informed the Commission that it will not be possible to divest the subsidiaries within the committed time frame. On 2 February 2011, Germany notified a request for an extension of the divestment period until 31 October 2011. On 23 February 2011, Germany submitted further information demonstrating that the Bank had done everything possible to conclude the sales process within the committed deadline.

| (3) | On 17 March 2011, Germany informed the Commission that for reasons of urgency it exceptionally accepts that this Decision is adopted in the English language. |
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(3)

On 17 March 2011, Germany informed the Commission that for reasons of urgency it exceptionally accepts that this Decision is adopted in the English language.

II.   FACTS

| (4) | The SpKB Decision was approved subject to the implementation of several commitments. According to point 13 of the Commitments (2), Sparkasse KölnBonn is to sell the following 11 participations by no later than 31 March 2011 to the City of Cologne, a company connected with the City of Cologne or a third party:






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(4)

The SpKB Decision was approved subject to the implementation of several commitments. According to point 13 of the Commitments (2), Sparkasse KölnBonn is to sell the following 11 participations by no later than 31 March 2011 to the City of Cologne, a company connected with the City of Cologne or a third party:

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The Decision does not provide for a prolongation of that deadline.

| (5) | Point 14 of the Commitments stipulates that “The individual transactions with the City of Cologne are to be carried out under normal market conditions. For this purpose, the current market value of the sales object at the time of transfer is to be determined by an independent expert.” According to point 15 “An auditing company is to verify the valuation of the assets and the contractually agreed general business data on behalf of the purchaser.” |
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(5)

Point 14 of the Commitments stipulates that “The individual transactions with the City of Cologne are to be carried out under normal market conditions. For this purpose, the current market value of the sales object at the time of transfer is to be determined by an independent expert.” According to point 15 “An auditing company is to verify the valuation of the assets and the contractually agreed general business data on behalf of the purchaser.”

| (6) | The participations concerned are small entities (4) active mainly in the infrastructure, urban and regional development projects. Their business is to develop, hold and/or manage a real estate object. None of them is active in the financial services sector. |
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(6)

The participations concerned are small entities (4) active mainly in the infrastructure, urban and regional development projects. Their business is to develop, hold and/or manage a real estate object. None of them is active in the financial services sector.

| (7) | On 7 October 2010, the City of Cologne passed the general resolution to acquire the participations and mandated its executives to enter into negotiations with the Bank. In accordance with public procurement rules, the City of Cologne has to conduct a public, European-wide tender in order to choose an auditing company, which will verify the valuation of the participations on the City's behalf. The tender process is already ongoing. According to the applicable rules, minimum deadlines have to be respected at the different stages of the process. Due to these binding deadlines the tender process and subsequently the valuation's verification by the chosen auditor cannot be finished before the targeted transfer date of 31 March 2011. |
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(7)

On 7 October 2010, the City of Cologne passed the general resolution to acquire the participations and mandated its executives to enter into negotiations with the Bank. In accordance with public procurement rules, the City of Cologne has to conduct a public, European-wide tender in order to choose an auditing company, which will verify the valuation of the participations on the City's behalf. The tender process is already ongoing. According to the applicable rules, minimum deadlines have to be respected at the different stages of the process. Due to these binding deadlines the tender process and subsequently the valuation's verification by the chosen auditor cannot be finished before the targeted transfer date of 31 March 2011.

| (8) | According to the current planning, it will be feasible to finalise the whole process, including tender, verification of the valuation, the municipal approval, signing and closing of the transaction, by 31 October 2011. |
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(8)

According to the current planning, it will be feasible to finalise the whole process, including tender, verification of the valuation, the municipal approval, signing and closing of the transaction, by 31 October 2011.

| (9) | Germany has committed that from 31 March 2011 until the closing of the sale Sparkasse KölnBonn will refrain from taking any strategic decisions concerning the participations to be transferred and will only take decisions as to the operational continuation of the businesses. |
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(9)

Germany has committed that from 31 March 2011 until the closing of the sale Sparkasse KölnBonn will refrain from taking any strategic decisions concerning the participations to be transferred and will only take decisions as to the operational continuation of the businesses.

| (10) | Notwithstanding the request for an extension of the deadline for the divestiture concerned, Germany argues that the Bank did all it could to ensure a timely sale. This was confirmed by the Trustee monitoring the divestitures by Sparkasse KölnBonn to which Germany committed itself. |
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(10)

Notwithstanding the request for an extension of the deadline for the divestiture concerned, Germany argues that the Bank did all it could to ensure a timely sale. This was confirmed by the Trustee monitoring the divestitures by Sparkasse KölnBonn to which Germany committed itself.

III.   ASSESSMENT

| (11) | The request to extend the deadline for the divestments set out in recital 4 by seven months, i.e. until 31 October 2011, concerns the implementation of the restructuring plan as approved in the SpKB Decision. |
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(11)

The request to extend the deadline for the divestments set out in recital 4 by seven months, i.e. until 31 October 2011, concerns the implementation of the restructuring plan as approved in the SpKB Decision.

| (12) | The Commission can extend deadlines for divestitures. Although it is not explicitly provided for in Regulation (EC) No 659/1999, the Commission has discretion to allow an extension as long as it does not impede the enforcement of a Decision (5). |
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(12)

The Commission can extend deadlines for divestitures. Although it is not explicitly provided for in Regulation (EC) No 659/1999, the Commission has discretion to allow an extension as long as it does not impede the enforcement of a Decision (5).

| (13) | The Commission notes that Sparkasse KölnBonn and the City of Cologne have already actively launched the sales procedure for the participations concerned. In that respect, the Commission takes note of the view of both Germany and the Trustee that the Bank did all it could to advance the sales process. |
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(13)

The Commission notes that Sparkasse KölnBonn and the City of Cologne have already actively launched the sales procedure for the participations concerned. In that respect, the Commission takes note of the view of both Germany and the Trustee that the Bank did all it could to advance the sales process.

| (14) | Finally, there are convincing arguments that the sales process will succeed by 31 October 2011 at the very latest, as the delay is due to the procedural reasons only, which are beyond the influence of the Bank. Both parties remain committed to the sale process. |
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(14)

Finally, there are convincing arguments that the sales process will succeed by 31 October 2011 at the very latest, as the delay is due to the procedural reasons only, which are beyond the influence of the Bank. Both parties remain committed to the sale process.

| (15) | An extension of the sales deadline by seven months does not put into question the overall implementation of the restructuring plan as approved in the SpKB Decision, which will last until 2014. In particular, the Commission considers that the prolonged period until signing will not give raise to any competition distortions, as the participations concerned are not active in the financial services sector and the Bank's influence on the entities to be sold will be limited to the necessary day-to-day management. Therefore, the extension, which is limited in time, should enable the Bank to sell its participations to the City of Cologne before 31 October 2011. It allows the Bank to overcome the above-described, mainly exogenous difficulties and complete the divestments concerned as provided for in the SpKB Decision. |
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(15)

An extension of the sales deadline by seven months does not put into question the overall implementation of the restructuring plan as approved in the SpKB Decision, which will last until 2014. In particular, the Commission considers that the prolonged period until signing will not give raise to any competition distortions, as the participations concerned are not active in the financial services sector and the Bank's influence on the entities to be sold will be limited to the necessary day-to-day management. Therefore, the extension, which is limited in time, should enable the Bank to sell its participations to the City of Cologne before 31 October 2011. It allows the Bank to overcome the above-described, mainly exogenous difficulties and complete the divestments concerned as provided for in the SpKB Decision.

| (16) | The Commission therefore considers that the relatively short requested extension until 31 October 2011 is necessary and justified, especially in view of the limited size of the companies to be divested and the nature of their business. |
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(16)

The Commission therefore considers that the relatively short requested extension until 31 October 2011 is necessary and justified, especially in view of the limited size of the companies to be divested and the nature of their business.

IV.   CONCLUSION

| (17) | For the reasons set out above the Commission finds that an extension by seven months for divesting the participations set out in recital 4 is necessary to enable, and does not prevent, a proper implementation of the Bank's restructuring plan. |
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(17)

For the reasons set out above the Commission finds that an extension by seven months for divesting the participations set out in recital 4 is necessary to enable, and does not prevent, a proper implementation of the Bank's restructuring plan.

V.   DECISION

The Commission extends the deadline for selling the participations as defined in point 13 of Annex I to Decision C(2010) 6470 until 31 October 2011.’

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(1)  Commission Decision on State aid C 32/09 (ex NN 50/09) implemented by Germany for the restructuring of Sparkasse KölnBonn, not yet published.

1

(2)  See Annex I to the SpKB Decision.

2

(3)  Confidential information.

3

(4)  As per 30 June 2010 the total market value of all concerned participations was estimated at approximately EUR [...] million.

4

(5)  Cf. Decision of 21 December 2010 in case MC 8/09 WestImmo.

5

WestImmo.

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