2009/174/EC: Commission Decision of 21 October 2008 on measure C 35/04 implemented by Hungary for Postabank and Takarékpénztár Rt./Erste Bank Hungary Nyrt. (notified under document number C(2008) 6023) (Text with EEA relevance)
Date: 2008-10-21
Institutions: European Commission
Subjects: Hungary, State aid, aid for restructuring, aid to undertakings, bank, control of State aid

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COMMISSION

COMMISSION DECISION

of 21 October 2008

on measure C 35/04 implemented by Hungary for Postabank and Takarékpénztár Rt./Erste Bank
Hungary Nyrt.

(notified under document number C(2008) 6023)

(Only the Hungarian text is authentic)

(Text with EEA relevance)

(2009/174/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
and in particular
Community,
Article 88(2) thereof,

establishing the European
subparagraph of
the

first

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above,

Whereas:

(1)

(2)

I. PROCEDURE

registered on
By letter dated 23 September 2003,
22 October 2003,
the Commission was notified of
State measures in favour of Postabank és Takarékpénztár
Rt., now Erste Bank Hungary Nyrt., (‘Postabank’ or the
‘Bank’). By e-mail dated 23 January 2004, registered on
26 January 2004, the Hungarian authorities notified a
series of additional measures adopted for Postabank. All
measures were notified under the interim mechanism
procedure, provided for in Annex IV.3 of the Act of
Accession, which forms part of the Accession Treaty to
the European Union (Accession Treaty).

On 30 April 2004, the Hungarian authorities submitted,
as a supplement
to the notification, an irrevocable
unilateral declaration by Postabank’s buyer, Erste Bank.
The declaration, which was signed on 29 April 2004,
provides for an overall cap on the payments payable
by Hungary, as
laid down in the share purchase
agreement, to Postabank’s buyer in respect of threatened
or unknown litigation claims and also narrows the scope
of the definition of risk in connection with unknown
claims.

(4)

(5)

(6)

procedure in respect of one measure, which was the
indemnity undertaking for unknown claims, given that
there were serious doubts regarding its compatibility with
the common market. The Commission Decision to
initiate the procedure was published in the Official
the European Union (1). The Commission
Journal
invited interested parties to submit their comments.

of

On 25 November 2004 the Hungarian authorities
submitted their observations on the decision initiating
the procedure and on 15 April 2005 Erste Bank also
submitted its
comments. The Commission received
comments from interested parties and forwarded them
to Hungary, which was given the opportunity to react.
Hungary’s comments were received by letter dated
July and October 2005 and
23 May 2005.
July and September 2008 the
February, March,
Commission also received various
from the
letters
Hungarian authorities and Erste Bank in which they
provided
the
arguments set out in their submissions.

In June,
June,

in support of

explanations

further

II. BACKGROUND

Postabank, which was established in 1988, used to
operate as a retail-oriented bank providing a full range
of banking services. By the end of 2002, Postabank was
the seventh largest commercial bank in Hungary with a
market share of about 3,7 % in terms of total assets.

As Postabank was lacking sufficient capital, over a period
of time the Hungarian authorities implemented a number
of
financial and regulatory measures with a view to
restoring its capital adequacy ratio. In 1998 Postabank
faced the risk of collapse and the Hungarian Government
had to step in and save the Bank through a huge reca­
pitalisation of HUF 152 billion (2),
thus becoming a
in the Bank. This bailout of
99,9 % shareholder
Postabank was intended to prepare it for restructuring
with a view to its privatisation within a short time.

(3)

By a decision dated 20 October 2004, the Commission
declared that most of
the notified measures did not
qualify as applicable after accession and it initiated the

(1) OJ C 68, 19.3.2005.
(2) Exchange rate on 25 August 2008: EUR 1 = HUF 235,2.

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(7)

(8)

(9)

In 2000 the first attempt to privatise Postabank failed. It
was eventually privatised following an open tender
procedure in October 2003, when the State-owned
majority stake in it was sold to the Erste Bank der öster­
reichischen Sparkassen, whose bid — at HUF 101,3
billion — was the highest submitted. On the basis of
the notification and submissions by the Hungarian auth­
the Commission’s understanding that
orities,
Postabank was sold to the highest bidder following an
open, non-discriminatory and unconditional two-round
tender procedure. On 1 September 2004 Postabank
was merged with Erste Bank Hungary.

is

it

(10) According to the share purchase agreement as modified
by Erste Bank’s unilateral declaration,
the terms and
conditions of
the indemnities for unknown litigation
claims regarding risk allocation between the seller and
follows: The seller would make
the buyer are as
payment in respect of:

— 90 % of the first HUF 10 billion of the total bank

liabilities concerned,

III. THE MEASURE (THE INDEMNITY UNDERTAKING
FOR UNKNOWN CLAIMS)

— 100 % of

the excess over HUF 10 billion, not

exceeding a total amount of HUF 200 billion.

all

the

same

bidders

contractual

In the tender procedure the Hungarian Government
offered
terms,
including an undertaking to provide indemnity in the
event of litigation that would cover payment liabilities
arising from threatened and unknown litigation claims
in respect of Postabank arising up to five years after
the conclusion of the sale and purchase agreement (1).
it became
The Hungarian authorities explained that
clear during the privatisation process that bidders had
to be given an undertaking providing for indemnities
for unknown claims, since no bidder would submit a
the
bid unless
indemnity undertaking was therefore indispensable for
the privatisation to take place.

such an undertaking were given;

irre­
On 29 April 2004, Erste Bank made a unilateral
vocable declaration in which it narrowed the scope of
the indemnity undertaking for unknown claims by
defining the categories of risk, as well as reducing the
overall cap from its previously unlimited size to HUF
200 billion. The unilateral declaration by Erste Bank
also provides for an overall cap of HUF 350 billion in
respect of the indemnity for threatened litigation claims,
which the Commission declared to be a measure not
applicable after accession (2).

(1) That is, up until 16 December 2008.
(2) On this basis, in relation to threatened litigation claims, the State as

seller would make payment in respect of:
— 50 % of the first HUF 4 billion of the relevant bank liabilities in

total;

— 100 % of the excess over HUF 4 billion, not exceeding a total

amount of HUF 350 billion.

The obligations of the seller in respect of indemnities for threatened
litigation claims lapse five years after completion of
the share
purchase agreement in relation to third party claims in respect of
which no court or arbitration proceedings have been initiated. The
indemnity undertaking for threatened litigation claims is confined to
three clearly defined items. The Commission declared the measure
not applicable after accession (see the decision initiating the
procedure, OJ C 68, 19.3.2005).

The obligations of the seller in respect of the indemnity
undertaking for unknown claims lapse five years after the
conclusion of the share purchase agreement in relation to
third-party claims in respect of which: (i) no court or
arbitration proceedings have been initiated; or (ii) no
seller’s written
bank liability
established with the
approval has arisen.

IV. LEGAL FRAMEWORK

the

(11) Annex IV.3 of the Act of Accession sets out what is
known as
interim mechanism procedure. This
provides a legal framework for the assessment of aid
schemes and individual aid measures put into effect in
a new Member State before the date of accession and still
applicable after accession.

(12) Annex IV.3(1) states that the following aid schemes and
individual aid put into effect in a new Member State
before the date of accession and still applicable after
that date are to be regarded on accession as existing
aid: (a) aid put into effect before 10 December 1994;
(ii) aid examined by the Commission and included in
the list annexed to the Accession Treaty; and (iii) aid
approved by
interim
the Commission under
mechanism procedure. Any measures
still applicable
after the date of accession that constitute State aid and
do not
these three categories are
deemed to be new aid on accession; the Commission
therefore has full powers to prohibit the application of
recovery of any sums
these measures and to order
unlawfully paid after accession. This application of
State aid rules to the future effects of measures still
applicable after accession does not entail any retroactive
application of the EC State aid rules and is in any event
mandated by the Act of Accession.

fall within one of

the

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(13)

The Commission considers that for a measure to qualify
as applicable after accession it must be shown that it is
liable to produce an additional benefit
that was not
known or not precisely known at the time when the
aid was granted. However, the Commission’s power of
review under the interim mechanism is inapplicable as
regards aid measures definitively and unconditionally
granted for a given amount before accession.
In this
respect, the relevant factor is the legally binding act by
which the competent national authorities granted the aid.
Individual measures
after
accession if the precise economic exposure of the State
is not known on the date the aid is granted and still
unknown on the date of accession.

considered applicable

are

(14) As stated in the decision initiating the procedure, with
respect to guarantees and the indemnity undertaking the
following conditions have to be met
in order for a
measure to be considered no longer applicable after
accession:

(17)

(16) However, on 20 October 2004 the Commission initiated
a formal investigation procedure in respect of one of the
undertaking
notified measures:
for
unknown claims.
the Commission
indemnity undertaking is applicable
stated that
after accession. The Commission took the view that the
measure could constitute State aid and had serious
doubts about its compatibility with the common market.

indemnity
In that decision,

this

the

VI. COMMENTS RECEIVED AFTER THE INITIATION OF
THE FORMAL INVESTIGATION PROCEDURE

1. Comments by Hungary

take

the view that

The Hungarian authorities
the
indemnity undertaking for unknown claims constitutes
a measure (rather than aid) that is not applicable after
accession. They claim that the measure meets the three
conditions to be regarded as no longer applicable after
accession within the meaning of paragraph 52 of the
Commission decision initiating the procedure.

(a)

the risks are precisely defined and included in an
exhaustive list closed by the date of accession;

(b) there is an overall cap on the amounts payable;

(c)

the litigation relates
that had already
occurred by the date of the indemnity undertaking
and not to any future events.

to events

(18)

They consider that the measure cannot constitute State
aid, since it is what its name says: an indemnity under­
taking, i.e. a conventional commercial term in a sale and
purchase agreement concluded under an open and
competitive procedure. The market price paid for
Postabank precludes aid.

V. DECISION TO INITIATE THE FORMAL INVESTI­
GATION PROCEDURE

(19)

(15) On the basis of the notification by the Hungarian auth­
orities, the Commission assessed the measures under the
EC State aid rules and concluded that the majority of
them fell outside the scope of the interim mechanism.
This was because these measures did not entail any
further financial exposure of Hungary after the date of
accession and did therefore not count as applicable after
accession (1).

(20)

‘Capital

‘Subordinated bonds, April 1995’,

(1) The following measures in favour of Postabank és Takarékpénztár
Rt./Erste Bank Hungary Nyrt. were considered not applicable after
accession:
increase,
September 1995’, ‘Subordinated bonds, March 1996’, ‘Subordinated
bonds, July 1996’, ‘Exemption from mandatory reserve requirement,
March 1997’,
‘Asset swap,
‘Direct surety by the State, April 1997’,
September 1997’, ‘Capital increase, June 1997’, ‘Subordinated bonds,
December 1997’, ‘Capital increase, May 1998’, ‘Capital restructuring,
December 1998’,
‘Exemption
from legal lending limits and investment limits, April 1999’, ‘Waiver
of Postabank's Consolidation Agreement liabilities, November 2001’,
‘Exemption from open currency position limit, October 2001’,
‘Exclusivity to open accounts for students for the disbursement of
Student loans, September 2001’ and ‘Indemnity for threatened liti­
gation claims, October 2003’.

‘Portfolio cleaning, December 1998’,

They also argue that the Commission did not take into
account the fact that Postabank was sold following an
open, non-discriminatory
tender
procedure.

and unconditional

the restructuring process, as

They further state that the restructuring of Postabank and
its privatisation are two entirely separate events and not
one indivisible ‘package’ as stated in the Commission’s
analysis, which assesses the pre-privatisation measures
after the event. The privatisation of Postabank was not
part of
the Bank had
the
returned to viability by that
measure is not part of a chain of interventions and the
need for it arose only in the course of the privatisation
process. The assessment of
the restructuring and the
privatisation as a single package is also beyond the juris­
diction of the Commission, since, as the Commission
itself acknowledges
the
formal investigation procedure, most of the elements of
this ‘package’ are not applicable after accession, which
means that they are not examinable by the Commission.

in the decision to initiate

time. Therefore,

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(21)

The Hungarian authorities further state that the measure
does not in itself distort competition as the market price
was paid in the course of
the privatisation, which
included the value to Erste Bank of the indemnity under­
taking. It was the measure that enabled the privatisation
of Postabank to go ahead.

also significantly lower than the difference between the
indicative bid received (1).
sales price and the highest
Therefore,
the Hungarian authorities believe that by
giving the indemnity undertaking the State was able to
generate an additional premium on the sale and that the
State acted wholly in line with the market economy
investor principle.

(22)

The Hungarian authorities explained that the need for the
measure became clear during the privatisation process, as
no bidder was willing to buy Postabank without
the
indemnification. Therefore it became an
possibility of
indispensable condition for
the privatisation to take
place. The Hungarian authorities argue that potential
buyers, in valuing the business, were not in a position
to fully assess the risk of litigation resulting from Post­
abank’s troubled past, this being a typical asymmetric
information problem. The State as seller conducted an
extensive litigation risk assessment before the privati­
sation. No new claims were identified and it was
strongly felt that any such claim would have come to
light prior to the privatisation process as the Bank had
been subject
to various audits and inspections since
1998.

in respect

of pending

(23) With regard to all litigation claims, at the time of the sale
purchase agreement
there was a certain risk-sharing
between the Hungarian State as seller and Erste Bank
as buyer, whereby the buyer took over all potential
liabilities
litigation, while
threatened and unknown litigation claims were partially
undertaken to a limited extent (for unknown claims 10 %
of the first HUF 10 billion and for threatened claims
50 % of the first HUF 4 billion of the relevant bank
liabilities
risk-sharing
mechanism the State intended to send an encouraging
signal to bidders that the seller was confident that the
State would not suffer financial loss as a result of that
arrangement and thereby to strengthen bidders’ will­
ingness to attribute a premium value to the Bank.

offering

total).

the

By

in

(25)

The Hungarian authorities furthermore state that a rescue
the
and restructuring analysis
measure does not constitute State aid.

is unnecessary since

(26)

(27)

In the decision initiating the procedure the Commission
considered that
the Strategic Cooperation Agreement
between Postabank and Magyar Posta (Hungarian Post)
signed in December 2002 reinforces the competitive
position of Postabank on the Hungarian market and
confers an advantage on it by granting it exclusivity for
the postal sale of jointly developed new products. The
Hungarian authorities claim that the Commission misin­
the relationship between Magyar Posta and
terprets
Postabank. They state that
the Strategic Cooperation
Agreement is a wholly commercial agreement and does
not grant either party any form of general exclusivity.

case

to justify

If the measure were to qualify as State aid, Hungary does
not agree with the doubts expressed by the Commission
(see paragraphs 135-138 of the decision to initiate the
investigation procedure) in respect of the appli­
formal
cation of Article 45(2) of the Europe Agreement in the
the measures granted for
present
Postabank. They argue that
the Commission should
take into account the fact that Hungary was not yet a
member of the EU when the measures under assessment
took place. They claim that the Hungarian Government
could not have allowed Postabank to fail in 1998 at a
time when it was experiencing its greatest difficulties and
the Hungarian market was not stable. The failure of
Postabank, given its size, could have led to a major
financial crisis.

(24)

the State estimated the
The privatisation advisor of
potential
liability arising from the unknown claims to
amount to zero in the best-case scenario and HUF 5
billion in the worst-case scenario. The total estimated
theoretical exposure to all
litigation (threatened and
unknown)
in the worst-case scenario was significantly
lower than the difference between the sales price of
HUF 101 billion and the proceeds originally envisaged
by the State before the privatisation. This amount was

(1) In the first round of the tender procedure bidders were asked for
their price proposals and had to itemise separately any undertaking
they were expecting from the State in connection with the Bank's
obligations in respect of pending and threatened litigation. As
described by the Hungarian authorities, ‘Each bidder had also sepa­
rately to indicate the level of comfort it would want in respect of
liabilities arising from pre-privatisation events and activities over
which it could have had no control. Then the share purchase
agreement was issued to the bidders in the second round, on the
basis of the suggestions made by the bidders in their indicative bids
concerning the handling of the pending and threatened litigation and
any other indemnity claim.’

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2. Comments by Erste Bank

(28)

Erste Bank submitted arguments similar to those put
forward by the Hungarian authorities. Erste Bank
disagrees with the conclusions of the Commission that
constitutes aid incompatible with the
the measure
common market.

together measures not applicable after accession and
the indemnity undertaking for unknown claims treats
the 1998-2002 measures as aid, although it has no juris­
diction to examine them.

(29)

Erste Bank also contests the contention that the measure
is applicable after accession. It claims that the measure is
limited in scope, amount and duration. All the potential
claims were clearly defined before accession; therefore,
no new aid could arise as a result of it after accession.

(30)

(31)

(32)

a

that

the market price was paid for

It further argues that the measure does not confer a
commercial advantage or distort competition, because it
is simply a standard market term in a share purchase
agreement for dealing with particular risks and it was
competitive procedure, which
agreed on under
ensures
the
there was
indemnity undertaking and that,
no element of aid. On the basis of case-law in relation
to privatisations conducted under open, non-discrimi­
natory, competitive and transparent procedures, Erste
Bank argued that it had legitimate expectations that the
sale of Postabank did not involve any State aid being
conferred on it.

therefore,

In addition, in contrast to a guarantee, which can be a
legal obligation in its own right, the measure is, by its
nature, an indemnity undertaking, which cannot be
viewed as a stand-alone measure, since it is always inex­
agreement. The
tricably
specific
the value of
indemnity undertaking serves to protect
the sale against
the assets transferred at
risks arising in respect of the period prior to the sale.

linked to a

the time of

sale

test

lump together

carried out by

Erste Bank also argues that
the measure should be
assessed in isolation from past measures and that the
private
the
analysis
investor
the pre-
Commission should not
accession restructuring measures for Postabank and its
privatisation. The measure
restructuring
measure, but an indemnity undertaking inextricably
linked to the share purchase agreement, which is
separate from the restructuring process. Postabank was
viable at
the
Commission has no jurisdiction to examine previous
that are not applicable after
restructuring measures
accession. The Commission’s
lumping
approach of

its privatisation. Second,

the time of

is not

a

(33)

Erste Bank also states, as a subsidiary argument, that the
Commission’s private investor test analysis is,
in any
incomplete as it does not examine the costs of
event,
liquidation or
the relevant Hungarian banking rules
preventing liquidations from taking place.

(34)

Erste Bank considers that, since the measure does not
constitute aid and is not applicable after accession,
there is no need for a compatibility assessment. It also
claims that the compatibility assessment is based on the
mistaken assumption that the measure is a restructuring
measure rather than an element in the privatisation.

(35)

(36)

Erste Bank further argues that
the measure does not
distort competition or confer a commercial advantage,
since it came about
in the context of a competitive
procedure under which Postabank was sold at a market
price. In any event, according to the case-law, the benefit
of any advantage would remain with the seller and would
not be passed on to the buyer. Therefore, there was no
selective commercial advantage in favour of Erste Bank
(in respect of the indemnity undertaking for unknown
claims or otherwise) as the State would have been
prepared to sell Postabank to whichever company had
offered the highest price.

It also states
the EU at
therefore

Erste Bank states that the Commission does not identify
the legal grounds for its applicability test and that in
order to show that the Commission has the jurisdiction
it would
to examine the measure under Article 88(2),
have to be shown that the undertaking constituted new
aid within the meaning of Annex IV(3) of the Act of
that Hungary was not a
Accession.
member of
the time the measures were
to
created
Article 87(1) EC. The Commission cannot apply State
aid
before
rules
accession,
Postabank share purchase
agreement, which is a legally binding act, as this would
contravene the principle of non-retroactivity. At the time
of privatisation neither Hungary nor Erste Bank was
aware of
to be
precisely defined in order for indemnity undertakings
not to be considered applicable after accession.

situations
the

to
such as

requirement

risks have

definitively

directly

subject

fixed

that

and

not

the

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VII. ASSESSMENT

1. Applicability after accession

amounts which might have to be paid after accession
may vary on the basis of criteria explained only in
general terms.

assessment

(37) As explained above as well as in the decision initiating
the Commission’s
first
the procedure,
examines whether the measure on which the formal
investigation procedure was initiated, i.e. the indemnity
undertaking for unknown claims,
is applicable after
accession according to the criteria set out in paragraph
14. The question of aid being ‘applicable after accession’
is a distinct question from the question of whether a
measure qualifies as aid (at any given relevant
time)
and is subject to distinct criteria.

(41)

The measure at issue therefore qualifies as applicable after
accession, with two exceptions. Following the clarifi­
cations provided by the authorities,
the Commission
has concluded that there are two items which fulfil the
criteria not to qualify as applicable after accession.

(38)

The irrevocable unilateral declaration signed on 29 April
2004 by Postabank’s buyer, Erste Bank, provides for an
overall cap of HUF 200 billion and a narrower definition
of risk in respect of Hungary’s liability towards the buyer,
as laid down in the share purchase agreement.

(39) However, despite this setting of an overall cap and
narrowing of the scope of the measure, the Commission
notes that the indemnity undertaken by the Hungarian
Government in order to facilitate the sale of Postabank
was not precisely defined and did not
involve an
exhaustive and binding list
finalised by the date of
accession. On the contrary, the measure covers indem­
nities with a wide scope, is not precisely defined and is
capped at a high level, which moreover was introduced
at a later date. Therefore, the undertaking provides the
potential for an undetermined number of further claims
beyond what had been clearly defined by the time of
accession, which is contrary to what the Hungarian auth­
orities and Erste Bank maintain.

(42)

(43)

Felelősségű Társaság

These two items relate to the potential claims of Arthur
Andersen Audit Könyvszakértő Korlátolt Felelősségű
Társaság and/or Prudentia Könyvvizsgáló és Gazdasági
Tanácsadó Korlátolt
their
assignees or legal successors) against Postabank or any
material subsidiary relating to the preparation of an audit
of Postabank or any material subsidiary in the period
limit of
prior to the year 2000, with a total financial
HUF 200 billion (included in ‘Risk definition O’
in
Erste Bank’s Unilateral Declaration of 29 April 2004).

(or

The Commission notes that these two companies have
already indicated to Erste Bank that they would file a
claim for damages against Erste Bank subject
to the
action brought by the
outcome of ongoing legal
Postabank’s
Hungarian
in
State
connection with their role as the Bank’s auditors. At
this stage, these claims constitute threatened claims. In
addition, Arthur Andersen has sought payment
from
Erste Bank for its legal costs incurred in connection
with the Hungarian State’s lawsuit.

auditors

against

(44)

The State’s indemnity undertaking covering these two
threatened claims fulfils all three criteria set out above
and can therefore not be considered applicable after
accession.

(40)

the

The Commission considers that a mere cap without
events which might
specific
listing (itemising)
trigger the undertaking does not tie the payment of the
indemnity after accession to specific events definitively
and unconditionally identified prior to accession.
It is
true that the financial exposure of the State has been
limited in theory, but the facts that would trigger the
potential payments by the State have not been clearly
identified, as is clear from the very name of the under­
taking, i.e. that it is for unknown claims. The limitation is
thus only apparent, as the scope and the concrete

(45)

Erste Bank states that the Commission does not identify
the legal grounds for its applicability test and that in
order to show that the Commission has the jurisdiction
to examine the measure under Article 88(2),
it would
have to be shown that the undertaking constituted new
aid within the meaning of Annex IV(3) of the Act of
that Hungary was not a
Accession.
the time the measures were
member of
created
to
Article 87(1) EC.

It also states
the EU at
therefore

directly

subject

and

not

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(49)

(46)

the Republic of Hungary (like all
that

the other
First,
candidate countries at
time) were already bound
— prior to accession — by the Europe Agreements,
which,
inter alia, declared any public aid which distorts
or threatens to distort competition by favouring certain
undertakings or the production of certain goods in so far
as they may affect trade between the Community and the
then candidate country incompatible with the proper
itself (1). Subsequently,
functioning of
Annex IV.3 of the Accession Treaty defined three cate­
gories of measures as existing aid: (i) those put into effect
before 10 December 1994; (ii) those examined by the
Commission and included in the list annexed to the
Treaty of Accession; and (iii) those approved under the
interim mechanism. The Treaty makes it clear that all
measures still applicable after the date of accession that
constitute State aid and do not fulfil the conditions of
existing aid would be considered new aid upon accession.

the Agreement

State resources

framework of Postabank’s privatisation the
In the
Hungarian Government (through ÁPV (2) provided the
buyer with an indemnity undertaking covering payment
liabilities that might arise from unknown litigation claims
the
in respect of Postabank up to five years after
conclusion of the share purchase agreement.
In other
words,
the Hungarian Government
committed public money in order to make the sale of
Postabank possible.
the measure
involves State resources.

is thus clear that

in this way

It

Economic advantage

(50) As stated above,

the Hungarian authorities and Erste
Bank argue in their comments on the decision initiating
the procedure that the measure is not capable of consti­
tuting State aid given that it is a typical commercial term
in a sale and purchase agreement concluded pursuant to
an open and competitive procedure and that the market
price paid for Postabank precludes aid. They argue that
the Commission should apply the market economy
investor principle and not consider the measure under
assessment to be aid since a market price, taking into
account the value of the measure to Erste Bank, had been
paid. They also claim that the market economy investor
test analysis carried out by the Commission should not
lump together Postabank’s pre-accession restructuring
measures and its privatisation, as the measure is not a
restructuring measure but an integral part of the share
purchase agreement.

(47)

It is therefore clear — on the basis of this primary EU
legislation — that the Commission has full powers to
review aid measures put into effect before and applicable
after accession that did not qualify as existing aid after
accession. The Commission can consider such measures
to be ‘new aid’ as of 1 May 2004 and can thus prohibit
the application of the aid after that date, as well as order
recovery of any sums unlawfully paid after accession, if it
considers that this aid is incompatible with the common
market. This application of State aid rules to the future
effects of measures applicable after accession and not
fulfilling the criteria of existing aid, as defined by the
Treaty of Accession, does therefore not entail any retro­
active effect of the EC State aid rules.

2. Existence of State aid

(48)

to Article 87(1) of

Pursuant
the EC Treaty, any aid
granted by a Member State or through State resources
in any form whatsoever which distorts or threatens to
distort competition by favouring certain undertakings or
the production of certain goods is, in so far as it affects
trade between Member States,
incompatible with the
common market.

(1) See Europe Agreement, Chapter II, Article 62(1)(iii).

(51) As stated in the decision initiating the procedure, aid
measures that are not applicable after accession cannot
be examined by the Commission under the procedures
laid down in Article 88 EC. The Commission’s power of
review under the interim mechanism is inapplicable as
regards aid measures definitively and unconditionally
granted for a given amount before accession. With the
exception of the indemnity undertaking for unknown
claims the Commission found the notified restructuring
to be applicable after
measures
for Postabank not
accession (3). They are therefore not
to this
subject
analysis.

(2) Állami Privatizációs és Vagyonkezelő Rt (Hungarian State Privati­
legal successor is
(Hungarian National Holding

sation and Holding Company), whose current
Magyar Nemzeti Vagyonkezelő Rt.
Company).

(3) See decision initiating the procedure in OJ C 68, 19.3.2005.

6.3.2009

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Official Journal of the European Union

L 62/21

(57)

(58)

(59)

(52)

(53)

(54)

(the

accession

indemnity

undertaking

Therefore, when assessing the only measure applicable
after
for
unknown claims given in 2003), the Commission has
to examine whether the Hungarian State’s action at the
time was in line with that of a market economy investor
in respect of the decision giving the undertaking at the
time of privatisation. Consequently, the measure is being
assessed by the Commission in isolation from previous
measures.

The assessment of the sale of Postabank can be separated
from the previous measures also because restructuring
had already been completed before privatisation. The
Commission notes
the Hungarian State Audit
Office issued a report in April 2003, recognising that
the restructuring of Postabank had been successfully
completed and that
the Bank was operating soundly.
Postabank was viable at the time of its privatisation.

that

This separation of the measures under assessment is not
at odds with the case-law in BP Chemicals (1), since that
case included three capital injections granted as part of a
single continuing restructuring process ‘the common
purpose of which was
to finance the restructuring
measures necessary and to restore EniChem’s capital
base which had been eroded by losses.’ In the assessment
of whether the three measures had to be examined as a
whole or the last measure had to be assessed separately,
the Court of Justice considered the decisive factors to be
the timing of
their purpose and the
situation of the firm at the time when each decision to
make an injection was made. In that case, without the
last measure, liquidation would have been inevitable. In
contrast, in the present case the indemnity undertakings
for unknown claims was connected with the sale of
the share
Postabank and formed an integral part of
purchase agreement at a time when the Bank had been
successfully restructured and its
liquidation was no
longer an issue.

the measures,

(55) When assessing the action of the Hungarian authorities
in the light of the market economy investor principle in
2003, it has to be noted that the Commission does not
question the way
and
acknowledges that
it was sold to the highest bidder
under an open competitive tender procedure.

Postabank was privatised

(56) However, this fact is not a sufficient condition to exclude
the existence of an advantage in the present case.

(1) Case T-11/95 BP Chemicals v Commission [1998] ECR II-3235; para­

graphs 178 and 179.

it

not
sold

capped. When
Postabank,

First, at the time of the conclusion of the share purchase
the indemnity undertaking for unknown
agreement,
the Hungarian
claims was
Government
committed public
money under the measure to the buyer of Postabank
to an unlimited extent. The Commission,
therefore,
considers that — even though the Hungarian State
conducted a thorough litigation due diligence before
the privatisation process started and found that the prob­
ability of having to make payments under the indemnity
undertaking was very low — a prudent private seller in
the present case would not have given a commitment of
an unlimited size to cover payment obligations arising
from unknown claims up to five years after
the
conclusion of the share purchase agreement, even if the
provision of
the indemnity undertaking resulted in a
higher sales price than the price the seller would have
obtained by selling Postabank without this undertaking.
The Commission considers that a market economy seller
selling Postabank would have at least included a ceiling
in the sale contract limiting the potential payment to the
purchaser under the indemnity. A market economy seller
would not have accepted running the risk of having to
pay an unlimited amount, even in the knowledge that the
likelihood of
such a high payment was very low.
Therefore, the fact that at the time of the privatisation
no ceiling was put on the indemnity shows that the State
did not behave in the same way as a market economy
operator.

The fact that Erste Bank made a unilateral declaration
whereby the State’s potential payment liabilities under
the indemnity undertaking were limited to HUF 200
billion does not change the Commission’s assessment
is
of
six
because
the
render
months
Hungarian State in granting the undertaking compatible
with the market economy investor principle.

a unilateral declaration by the buyer
the behaviour of
later

the Hungarian State. This

the behaviour of

cannot

If

This conclusion is in no way altered by the fact that
bidders, who were not able to fully quantify the litigation
risk given the troubled past of Postabank, considered the
measure to be an indispensable condition for the priva­
tisation.
the indemnity undertaking for unknown
claims had not been given, the Bank would probably
have remained in State ownership. In such a situation,
if a potential claim under the indemnity undertaking
materialised in the future, the State — if acting in line
with the market economy investor principle — would
have had to cover claims only up to the value of the
business and not up to an unlimited amount. Therefore if
the State had been acting in line with the market
economy investor principle,
it would not have pledged
unlimited indemnity.

L 62/22

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Official Journal of the European Union

6.3.2009

(60)

(61)

the

sale was

though there was an open and competitive
Second,
tender with equal treatment of all bidders, it cannot be
said that
conducted under market
conditions. Since the amount of the indemnity was not
limited, the bids could not include a proper price for it.
Since it was impossible to put a value on the unlimited
indemnity undertaking, the tender procedure could not
be said to have involved a ‘market price’ or, therefore, to
have been conducted under market conditions.

since it arose pursuant

Erste Bank argues that the measure does not confer a
to a
commercial advantage,
competitive procedure and the market price was paid.
to a number of
In this context, Erste Bank refers
Commission Decisions (1). Citing the Banks (2)
and
Systems Microelectronic (3) cases, Erste Bank further
argues that when a company has been in receipt of an
advantage and it is sold at a market price by the State,
the benefit of any advantage would remain with the seller
and would not be passed on to the buyer.

(62)

The Commission notes that the Banks case cited by Erste
Bank establishes the general principle that where an open
and competitive tender procedure takes place under
there is normally no aid to the
market conditions,
buyer of the company.
In the present case, however,
under normal market conditions Erste Bank would not
have benefited from an unlimited indemnity, since a

(1) Hytasa (92/317/EEC) — Commission Decision of 25 March 1992
(OJ L 171, 26.6.1992, p. 54), Centrale del Latte di Roma
(2000/628/EC) — Commission Decision of 11 April 2000 (OJ
L 265, 19.10.2000, p. 15), Crédit Foncier de France (2001/89/EC)
— Commission Decision of 23 June 1999 (OJ L 34, 3.2.2001,
p. 36), KataLeuna GmbH Catalysts (2001/685/EC) — Commission
Decision of 13 February 2001 (OJ L 245, 14.9.2001, p. 26),
Entstaubungstechnik Magdeburg GmbH (ETM)(2000/395/EC) —
Commission Decision of 22 December 1999 (OJ
L 150,
(1999/269/EC) — Commission
23.6.2000, p. 64),
Italstrade
Decision of 16 September 1998 (OJ L 109, 27.4.1999, p. 1),
TASQ (2000/647/EC) — Commission Decision of 3 May 2000
(OJ L 272, 25.10.2000, p. 29), Gothaer Fahrzeugtechnik GmbH
(2002/896/EC) — Commission Decision of 30 January 2002 (OJ
L 314, 18.11.2002, p. 62), Buna/Leuna (96/545/EC) — Commission
Decision of 29 May 1996 (OJ L 239, 19.9.1996, p. 1), InfraLeuna
(C/1999/646) — Commission Decision of 25 November 1998 (OJ
(97/81/EC) —
L 260, 6.10.1999, p. 1), Head Tyrolia Mares
Commission Decision of 30 July 1996 (OJ L 25, 28.1.1997,
p. 26), Koninklijke Schelde Groep (2003/45/EC) — Commission
Decision of 5 June 2002 (OJ L 14, 21.1.2003, p. 56).

(2) Case C-390/98 H.J. Banks & Co. Ltd v The Coal Authority and Secretary

of State for Trade and Industry.

(3) Case C-277/00 Federal Republic of Germany v Commission.

prudent market economy seller would not have sold
Postabank together with an unlimited indemnity under­
taking for unknown claims. In conclusion, since a market
economy operator selling Postabank would not have
pledged unlimited indemnity for unknown claims, Erste
Bank received an economic advantage as a result of
purchasing Postabank with the indemnity undertaking
for unknown claims.

(63)

The Commission therefore considers that assessed in
the market
isolation,
economy seller test.

the measure does not meet

(64)

(65)

(66)

Assessment of privatisation together with restructuring

In the decision initiating the procedure the Commission
viewed the measures relating to restructuring and priva­
tisation together because
in 1998 the Hungarian
Government had informed the Commission that it had
decided to make a capital injection and become 99,9 %
owner of Postabank, with a view to restructuring and
i.e. the Hungarian authorities themselves
privatising it,
seemed to link the restructuring with the privatisation.
and partly regulatory support
The partly financial
measures granted as of December 1998 made
it
possible to keep the bank operational and to facilitate
its privatisation.

Therefore, the Commission will carry out a secondary
assessment of the undertaking given at the time of priva­
tisation measure that examines it jointly with the earlier
restructuring measures; however, since it has already
been established that the measure viewed in isolation
constitutes aid,
if
examined in conjunction with the earlier restructuring
measures.

it cannot but still constitute aid,

the whole set of measures are jointly taken into
If
account for the market economy investor principle test,
the calculation of the costs born by the State includes the
measures adopted by the Hungarian authorities
to
restructure the bank prior to its sale as well as those
measures decided on within the framework of the sale.
The aggregation of the measures concerned results in an
overall negative price for the sale of about HUF 53,4
billion (i.e. about EUR 211 million), which is the result
of the simplified approach of deducting the value of the
State measures since December 1998 from the actual sale
price achieved on privatisation. This result does not
include any additional costs the State may have to bear
with regard to the indemnity undertakings given at the
time of privatisation.

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Official Journal of the European Union

L 62/23

(67)

The Commission notes that at no point in time since
1998 was
the restoration of viability of Postabank
through privatisation predicated on the realisation of a
‘positive price’ for the Hungarian Government, i.e. on the
realisation of a reasonable expected return on the
investment. This is borne out by the fact
the
measures were introduced without any precise determi­
nation of a future target sale price.

that

(68) On this basis, in line with the market economy investor
investor operating under normal
principle, a rational
market conditions would not, on purely commercial
grounds, have contributed or committed money to
and reasonable
Postabank without having concrete
expectations of being able to sell
it for a price higher
than the total funds injected into it.

In Case C-344/99 the Court

(69) As mentioned above, the Commission acknowledges that
Postabank was sold to the highest bidder in an open
unconditional competitive tender. However, an open
tender procedure does not always rule out the possibility
found as
of State aid.
‘[…] with regard to the German Government’s
follows:
claim that the procedure for GS’s privatisation satisfied
the requirements of an open, transparent and uncondi­
tional procedure laid down in the general privatisation
principles,
it is enough to state that, regardless of the
legal value of those principles, and assuming that claim
to be established,
is not such as to challenge the
finding that the option of privatising GS at a negative
selling price did not satisfy the private investor test and
therefore entailed elements of State aid’ (1).
If restruc­
turing and privatisation are considered together,
i.e.
taking
the public
the
measures implemented before the sale of the Bank, this
results in a negative price for the State.

into account

amounts of

it

State acted with the aim of protecting the stability of the
financial system and not as a private investor acting with
the aim of making a profit.

(72)

In addition, to assess whether it is more profitable for the
State to wind up a company rather than to sell it, the
Community Courts have clarified that a distinction must
be drawn between the obligations which the State must
assume as owner of the share capital of a company and
its obligations as a public authority: only the former can
be duly taken into account for the assessment of the
existence of aid (3). Therefore, excluding from the calcu­
lations the costs that would not have been taken into
account by a private investor,
liquidation would have
cost less for the State than restructuring and privatisation
taken together.

(73) As mentioned above, Erste Bank argues that the measure
does not confer a commercial advantage, because it arose
pursuant to a competitive procedure and therefore the
benefit of any advantage would remain with the seller
and would not be passed on to the buyer.

(74) As stated above, this holds true only if the open and
competitive
takes place under
tendering procedure
normal market conditions. This condition is, however,
fulfilled since a private seller would not have
not
pledged unlimited indemnities
for unknown claims.
Furthermore, a private investor would not have im­
plemented the measures for Postabank, since the total
measures following the State’s capital
injection resulted
in a negative price for the State.

(70)

Erste Bank states that the Commission’s private investor
test analysis is incomplete as it does not examine the
costs of liquidation or the relevant Hungarian banking
rules preventing liquidations from taking place.

(71)

that

the
it clear

the
The Commission notes
Community Courts makes
the private
operator criterion is applicable only to situations in
which the intervention of the State is of an economic
the
nature and not
forms part of
exercise of public powers (2).
In the present case, the

case-law of
that

to those where it

(75)

(76)

In view of the above, the whole set of State measures
since December 1998 adopted with a view to facilitating
the restructuring and privatisation of Postabank, of which
the measure at
the
private investor test, and therefore confers an economic
advantage on Postabank and Erste Bank, which were
merged on 1 September 2004.

issue forms part, does not meet

Selectivity

Since it has been established that despite the tender
procedure,
the measure resulted in an advantage for
Erste Bank (as no private seller would have pledged
unlimited indemnity),
the measure is
selective.

follows that

it

(1) See Case C-334/99 Germany v Commission, pp. 133-142.
(2) See the conclusions of 14 January 2003 of Advocate General Léger

(3) See Joined Cases C-278/92 to C-280/92 Spain v Commission, p. 22

in the Altmark case (Case C-280/00, p. 20 et seq.).

and Case C-334/99, cited above, pp. 133-134.

L 62/24

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Official Journal of the European Union

6.3.2009

Potential distortion of
Community trade

competition and impact on intra-

(77) At the end of 2002 Postabank was the seventh largest
commercial bank in Hungary. Throughout
the period
under assessment it was active in the financial sector,
which is open to intense international competition and
where
trade between Hungary and the
European Union, including a substantial number of EU
banks operating in the Hungarian banking market.

there was

(83)

(78) According to case-law (1), when State aid strengthens the
position of an undertaking compared with other under­
takings competing in intra-Community trade, the latter
undertakings must be regarded as being affected by that
aid. It has been established that by giving the indemnity
undertaking for unknown claims the Hungarian State
granted a selective advantage to Erste Bank.
It can,
therefore, be concluded that this selective advantage in
connection with the purchase of Postabank strengthened
Erste Bank’s position and consequently has the potential
to affect intra-Community trade and to distort compe­
tition.

(79)

In conclusion, all the criteria of Article 87(1) being met,
the
claims
constitutes State aid within the meaning of the EC Treaty.

undertaking

indemnity

unknown

for

3. Compatibility assessment

to take action only in respect of

(80) Under the interim mechanism the Commission has the
power
those aid
measures that are considered applicable after accession.
The notified measure is applicable after accession and
constitutes
of
aid within
Article 87(1) of the EC Treaty. Therefore the Commission
has to assess its compatibility with the common market.

the meaning

State

Article 87(2)(b) and Article 87(3)(b) of the EC Treaty

(81)

The conditions according to which an aid measure is
compatible or may be deemed compatible with the
common market are set out in Article 87(2) and (3) EC.

(82)

The exemptions provided for in Article 87(2) of the EC
Treaty do not apply to the present case. The Commission
considers in particular that the aid granted in the present
case was not aimed at making good damage caused by
natural disasters or exceptional occurrences pursuant to

(1) See Case 730/79 Philip Morris v Commission.

Article 87(2)(b) EC. The term ‘exceptional occurrences’
does not cover financial
losses caused by commercial
decisions of economic operators. The Commission also
notes
in
Hungary.

there was no general banking crisis

that

Likewise, the aid cannot be exempted on the basis of
time when the
Article 87(3)(b).
In 2003,
indemnity undertaking was
there was no
systemic crisis in the Hungarian banking sector that
the
might have
Hungarian economy.

serious disturbance of

the
given,

led to a

at

Article 87(3)(c) of the EC Treaty

(84) According to Article 87(3)(c) of

the EC Treaty,

the
Commission may authorise State aid that is granted to
facilitate the development of certain economic activities
or of certain economic areas, where such aid does not
adversely affect trading conditions to an extent contrary
to the common interest.

(85)

(86)

The Hungarian authorities notified most of the measures
introduced between 1998 and 2002 for Postabank as
restructuring measures, whereas the indemnity under­
taking in connection with the Bank’s privatisation was
notified separately. The Commission assesses whether the
measure can be considered compatible in the light of
Article 87(3)(c) of the EC Treaty, under the rescue and
restructuring guidelines.

Rescue and restructuring guidelines

set out

The Article 87(3)(c) compatibility conditions for rescue
and restructuring aid are
in Community
guidelines. The current Community guidelines on State
aid for rescuing and restructuring firms in difficulty
entered into force on 10 October 2004 (2). For aid
granted before the publication of these guidelines the
previous Community
aid for
rescuing and restructuring firms in difficulty (3) set out
the conditions under which such aid was considered
compatible (4). The
sale purchase agreement, which
includes
for unknown
the
indemnity undertaking
signed on 20 October 2003. The
claims, was
the 1999 guidelines
Commission thus considers that
should apply in the present context.

guidelines on State

(2) OJ C 244, 1.10.2004, p. 2.
(3) OJ C 288, 9.10.1999, p. 2.
(4) See p. 104 of the 2004 guidelines.

6.3.2009

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Official Journal of the European Union

L 62/25

(87)

(88)

Eligibility of the firm

(94)

The 1999 guidelines consider a firm to be in difficulties
if it is unable to recover through its own resources or by
raising
from shareholders or
the
borrowing.

it needs

funds

The restructuring plan submitted by the Hungarian auth­
orities was produced after the event for the purpose of
the notification in 2004. It did not exist at the time of
the earlier restructuring measures, which makes it clear
that no restructuring plan existed, as required by the
rescue and restructuring guidelines,
incorporating the
indemnity undertaking for unknown claims as part of
the restructuring operation.

The Commission considers that Postabank’s problems in
1997-1998 were severe and it was a firm in difficulty
since it would have been unable to recover without State
intervention.

(89) As the Hungarian authorities stated, the measure did not
form part of the restructuring, since it was related to the
sale of the Bank and the need for it arose only during the
tendering procedure. The indemnity undertaking for
unknown claims was given as part of the privatisation
in 2003. By that
the capital structure and the
the Bank had stabilised. Postabank had
position of
regained its viability. The Hungarian State Audit Office
issued a report
the
restructuring
successfully
of
completed and that the Bank was operating soundly.

in April 2003, recognising that
had

Postabank

time,

been

(90)

Therefore, since Postabank was already viable in 2003,
no further restructuring aid could be granted.

Therefore, the Commission considers that at the time
when the indemnity undertaking was given in 2003
Postabank did not qualify as a firm in difficulty and
therefore was not eligible for
further
restructuring aid. This means that there is no basis to
find it compatible under the rescue and restructuring
guidelines.

rescue or

for

involves

secondary assessment

The
considering the
measure in conjunction with the earlier restructuring
measures as part of one restructuring and privatisation
operation (see secondary reasoning above). As discussed
above, Postabank was already viable in 2003 when the
decision to provide the indemnity undertaking was taken.

(91)

(92)

(93)

(95)

the indemnity undertaking is
Consequently, even if
assessed together with the other measures, it cannot be
found compatible under the rescue and restructuring
guidelines since Postabank was not eligible as a firm in
difficulty at
the decision to provide the
undertaking and the undertaking did not form part of
a pre-existing restructuring plan.

the time of

Article 45(2) of the Europe Agreement

(96) Article 45(2) of the Europe Agreement reads as follows:
‘In respect of financial services, described in Annex XIIa,
this Agreement does not prejudice the right of the Parties
to adopt measures necessary for the conduct of
the
Party’s monetary policy, or for prudential grounds in
order to ensure the protection of investors, depositors,
policy holders, or persons to whom a fiduciary duty is
owed, or to ensure the integrity and stability of
the
financial system. These measures shall not discriminate
on grounds of nationality against
and
nationals of the other Party in comparison to its own
companies and nationals.’

companies

(97)

In the decision initiating the procedure, the Commission
had serious doubts as to whether Article 45(2) of the
Europe Agreement applied to State aid measures at all,
since it forms part of the ‘Establishment’ chapter of the
Europe Agreement, whereas the provisions concerning
State aid are listed in Article 62 et seq. In addition, the
Commission considered that this provision could apply
to any measures with a general scope of application
adopted by a financial supervisory authority and that
there was no general banking crisis in Hungary.

In order for the measure to be considered as compatible
restructuring aid, it would need to have been part of a
pre-existing restructuring plan implemented at the time
when the difficulties of the firm arose. The granting of
restructuring aid is conditional on the implementation of
a restructuring plan that must restore the long-term
viability of the firm within a reasonable timescale on
the basis of realistic assumptions as to future operating
conditions.

(98)

the Hungarian
The Hungarian authorities argue that
Government could not have allowed Postabank to fail
in 1998 at a time when it was experiencing its worst
difficulties and the Hungarian market was not stable and
that the failure of Postabank, given its size, could have
led to a major financial crisis.

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Official Journal of the European Union

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(99) However, the indemnity undertaking was given at a time
when Postabank was no longer a firm in difficulty. In any
event, the Commission considers that Article 45(2) of the
Europe Agreement does not in itself provide a legal basis
to consider any measure in the form of State aid to be
compatible with the common market.

(100)

In conclusion, the indemnity undertaking for unknown
claims constitutes incompatible State aid.

4. The issue of recovery

(101)

In the context of the interim mechanism, any action that
the Commission is empowered to take is limited to
accession, which in the
applicable
measures
after
present case means
the indemnity undertaking for
unknown claims.

(102)

(103)

In spite of the argument that this measure was paid for
the foregoing
in the purchase price, on the basis of
the
considerations,
that
should
measure
from
therefore be terminated with retroactive effect
30 April 2004.

the Commission believes
incompatible

constitutes

and

aid

terms,

In practical
termination with retroactive effect
from 30 April 2004 would imply the recovery of any
claims paid after that date that do not qualify as claims
inapplicable after accession. However, no recovery is
necessary as no payments have actually been made
under the indemnity undertaking. This is due to the
entirely contingent character of
the indemnity under­
taking.

(104) The Commission should in principle ask for a charge to
be levied for the indemnity undertaking in order to offset
the advantage of the measure.

(105) However,

is an objective one,

the Commission accepts the argument

that
levying such a charge could contravene the principle of
legal certainty, having regard to the specific circum­
stances in which an entirely contingent undertaking/­
guarantee, such as the indemnity for unknown claims,
was given. Although the concept of ‘applicability after
accession’
the specific criteria
applicable to the indemnity undertaking were not fully
clear or foreseeable for the Hungarian Government or
Erste Bank at
the time when the undertaking was
provided, i.e. when the privatisation of Postabank took
place. Therefore, in the absence of clear and transparent
criteria relating to the concept of applicability after
accession with regard to indemnities,
the interested
parties may not have been in a position to foresee that
indemnity undertakings for unknown claims granted

before accession would be regarded as applicable after
accession in circumstances
the
Postabank sale.

those of

such as

(106) Moreover, despite the objective character of the legal text
in the Treaty of Accession, the Commission’s guidelines
on the concept of applicability after accession with
regard to guarantees and indemnity undertakings were
only gradually clarified over
time. The Treaty of
Accession was signed on 16 April 2003. Annex IV.3
the Commission
does not
would apply for the assessment of applicability after
accession in the case of contingent measures such as
Instead,
guarantees
Commission
acceding
countries about the post-accession applicability criteria
in the form of guidance letters.

undertakings.
the

specify the criteria that

departments

indemnity

informed

and

(107) By letter dated 4 August 2003 to the Mission of the
Republic of Hungary to the EU, the Commission reit­
‘applicable
erated its understanding of the concept of
after accession’
individual aid measures.
in respect of
letter did not explicitly address
However,
the
that
indemnity undertakings, nor did it
assessment of
explicitly require itemisation, namely that
the risks
should be precisely defined and included in an exhaustive
list closed by the date of accession, as a criterion for the
indemnity undertaking not to be considered applicable
after accession. The Commission letter appeared to be
fully exhaustive as regards the concept of applicability
after accession and did not refer in any way to the item­
isation requirement. Itemisation is the criterion which the
measure fails to satisfy in its current form.

(108) Erste Bank purchased Postabank on 20 October 2003
the

agreement

purchase

included

sale

the

and
indemnity undertaking.

the

formal

decisions

(109) The next guidance on the applicability test was available
Commission’s
through
of
28 January 2004 on Česká Spořitelna (CZ 14/03) and
of 16 December 2003 on Komerční Banka (CZ 15/03).
These decisions stated that the Commission considers
individual aid measures to be applicable after accession
the State is not
if
the precise economic exposure of
known on the date the aid is granted.
In neither of
these cases was any mention made of any itemisation
requirement,
the risks be
the requirement
precisely defined and included in an exhaustive list
closed by the date of accession in order for a given
indemnity undertaking not to qualify as applicable after
accession.

that

i.e.

6.3.2009

EN

Official Journal of the European Union

L 62/27

(110) This

to
itemisation requirement was not brought
Hungary’s attention by the Commission until the letter
dated 19 March 2004. This letter referred explicitly to
the Postabank case and gave guidance on the post-
accession applicability of the indemnity undertaking, in
particular as regards the three criteria referred to in
paragraph 14 of this decision and in paragraph 52 of
the decision initiating the procedure, as stated above.

(111) Therefore, at

the time when the Postabank sale and
purchase agreement was drawn up in October 2003,
not all the relevant criteria for determining the post-
accession applicability of contingent guarantees and
indemnity undertakings (as opposed to other measures,
such as those giving rise to a certain payment obligation
in the period after accession), were known to the parties
concerned. With this in mind,
it would seem unrea­
sonable to require recovery in respect of aid that was
granted at a time when the Commission’s guidelines on
the post-accession applicability criteria for
indemnity
undertakings had not been fully clarified and yet may
even have given the misleading impression of being
complete.

(112)

In addition, the positive effect of the indemnity under­
taking was to a large extent offset by the fact
that
markets were aware of the ongoing Commission investi­
gation. The indemnity undertaking could not have a
major positive effect on the financial situation of the
Bank. It relates to specific litigation risks in connection
with Postabank’s past and does not constitute a general
fundraising
guarantee
advantage.

that would provide

a direct

(113) On the basis of the foregoing and the overall circum­
the Commission is not seeking
stances of
payment of a charge for the indemnity undertaking for
unknown claims.

the case,

(115) The Commission finds that the rest of the indemnity
undertaking for unknown claims given by Hungary to
Postabank és Takarékpénztár Rt./Erste Bank Hungary
Nyrt. does qualify as applicable after accession and
constitutes State aid incompatible with the common
market,

HAS ADOPTED THIS DECISION:

Article 1

1.
The potential claims by Arthur Andersen Audit Könyvs­
zakértő Korlátolt Felelősségű Társaság and Prudentia Könyv­
vizsgáló és Gazdasági Tanácsadó Korlátolt Felelősségű Társaság
(or their assignees or legal successors), as included in ‘Risk
definition O’
in the Erste Bank unilateral declaration of
29 April 2004, do not qualify as applicable after accession.

The rest of

implemented

the indemnity undertaking for unknown
2.
claims
for
Postabank és Takarékpénztár Rt./Erste Bank Hungary Nyrt.,
does qualify as applicable after accession and constitutes State
aid incompatible with the common market.

the Republic of Hungary

by

Article 2

The Republic of Hungary shall
the
indemnity undertaking for unknown claims that qualifies as
applicable after accession with retroactive effect from 30 April
2004.

terminate the part of

Article 3

The Republic of Hungary shall inform the Commission, within
two months of notification of this Decision, of the measures
taken to comply with it.

VIII. CONCLUSION

This Decision is addressed to the Republic of Hungary.

Article 4

(114) On the basis of the foregoing, the Commission concludes
that the part of the indemnities contained in the measure
that had been clearly defined by the time of accession is
not applicable after accession (i.e. the potential claims of
the two audit companies, Arthur Andersen Audit and
Prudentia, against Postabank, as set out under ‘Risk defi­
nition O’
in the Erste Bank unilateral declaration of
29 April 2004).

Done at Brussels, 21 October 2008.

For the Commission

Neelie KROES
Member of the Commission