98/204/EC: Commission Decision of 30 July 1997 conditionally approving aid granted by France to the GAN group (Only the French text is authentic) (Text with EEA relevance)

• Articles: 6

Article 1

The measures contained in GAN's restructuring plan in the form of a FRF 2,86 billion capital increase carried out in 1995, other capital increases planned for 1997 totalling FRF 11 billion, and the commitment entered into by the State to cover the losses up to an amount estimated at FRF 9 billion which GAN will determine when the guarantees on the hive-off vehicles are invoked, are State aid within the meaning of Article 92(1), but they are hereby declared compatible with the common market and with the EEA Agreement pursuant to Article 92(3)(c) of the EC Treaty and Article 61(3)(c) of the EEA Agreement. In view of the uncertainty surrounding certain elements of the plan, a margin of error of ± 10 % is to be incorporated in the value of the State's commitment towards the GAN group and the aid shall be limited to FRF 23,76 billion.

Article 2

The aid referred to in Article 1 is authorised subject to France's complying with the following undertakings:

(a) it shall sell, either together or separately, CIC and GAN to buyers in a position to ensure their future viability and long-term development;

(b) it shall ensure that the operations aimed at finding potential buyers and selling the companies start as soon as possible and in any event no later than 30 June 1998 and that they are carried out in accordance with the principles of openness and equal treatment of candidates;

(c) it shall, by the end of 1998, dispose of UIC and all holdings in UIS held by the various companies in the GAN group;

(d) it shall ensure that GAN sells other strategic shareholdings worth a total of some FRF 2,4 billion;

(e) it shall underwrite the current process of the disposal of the assets of Bâticrédit and Parixel, a process which for the most part shall have been completed by the end of 1998, without its being possible for these assets to be acquired by CIC or GAN up until the time of their sale;

(f) it must ensure, by disposing of assets to third parties, that GAN or, after its sale, its buyer, reduces, no later than 12 months after GAN is sold off, the turnover of GAN's international insurance business by 50 % as compared with the level entered in the accounts for 31 December 1996.

Article 3

The authorisation of the aid referred to in Article 1 is also subject to France's observance of the following conditions:

(a) it shall ensure that all the recovery measures and all the arrangements provided for under the scheme described in Article 1 and contained in the restructuring plan presented to the Commission are implemented;

(b) it shall not amend the conditions laid down in the restructuring plan, after taking into account the conditions imposed by this Decision, without the Commission's prior consent;

(c) it shall prevent the companies of the GAN group in receipt of the State aid in question from benefiting from a carry-over of tax losses in respect of the tax losses covered by the capital increases;

(d) it shall earmark the proceeds of sales to restructure intra-group relationships so as to reduce the capital, financing and guarantee links between the different entities of the group;

(e) it shall ensure that the conditions of the sell-offs of GAN, CIC, UIC and UIS do not include any clauses which might impose unacceptable limitations on the number of potential candidates or target any particular potential candidate, and shall further ensure that buyers are selected with a view both to maximising receipts from the sales and to guaranteeing that the new shareholders are indeed in a position to ensure the future viability and long-term development of the companies sold;

(f) it shall ensure that the sales of other strategic shareholdings as referred to in point (d) of Article 2 take place by the end of 1998 and are evaluated on the basis of net book value as entered in the accounts for 31 December 1996.

Article 4

The French authorities shall cooperate fully in monitoring compliance with this Decision and shall submit to the Commission the following documents:

(a) a detailed report by the French authorities on the implementation of the Commission Decision and of the restructuring plan. This report shall:

- examine the viability of the various entities of the group remaining under State control by presenting detailed results compared with the estimates contained in the plan,

- detail any State intervention in favour of those same entities (in the form of recapitalisation, financing, guarantees, waiver of debts, etc.),

- analyse in detail the undoing of the capital, financing and guarantee links between the different entities of the group,

- describe the extent to which the undertakings and conditions set forth in Articles 2 and 3 have been complied with.

Such a document shall be submitted every six months from the date of the Commission Decision until the date of fulfilment of the undertakings and conditions set forth in Articles 2 and 3;

(b) the balance sheets, accounts and reports (both annual and half-yearly) drawn up by the management of the companies forming part of the GAN group (namely GAN, SC, GAN SA, GAN Vie, GAN IA, GAN Capitalisation, SOCAPI, Progress, CIC, UIC, UIS and BIF) and of the hive-off vehicles until the date of their privatisation. These documents shall be submitted to the Commission as soon as they are approved by the boards of directors of the entities in question.

Submission of the documents provided for in point (b) shall not exempt the French authorities from having to include in the report provided for in point (a) detailed and even provisional accounts and balance sheets of the various entities of the group;

(c) the conditions of the planned sell-offs of UIC, UIS, CIC and GAN.

These documents shall be submitted to the Commission in advance.

The Commission may ask for these documents and the implementation of the plan to be assessed by means of special audits.

Article 5

The Commission Decision of 18 September 1996 approving FRF 2,86 billion of State aid for GAN, notified to France on 3 October 1996, is hereby revoked.

Article 6

This Decision is addressed to the French Republic.

Done at Brussels, 30 July 1997.

For the Commission

Karel VAN MIERT

Member of the Commission

(1) OJ C 149, 17.5.1997, p. 6.

(2) GAN already had a minority holding in the capital of CIC as from 1985.

(3) In order to deal with the difficulties of their minority-holding banking subsidiaries or at the request of the State, insurers have recently taken control of banking groups: thus, AGP has taken control of CDE and UAP has taken control of Worms Bank.

(4) Commission Communication to the Member States on the application of Articles 92 and 93 of the EEC Treaty and of Article 5 of Commission Directive 80/723/EEC to public undertakings in the manufacturing sector (OJ C 307, 13.11.1993, p. 3).

(5) See the Commission's 1984 Communication in Bulletin of the European Communities No 9-1984.

(6) Use of the discounted method for assessing State aid was set out in the Commission communication referred to in footnote 4. This method has been used in other cases, notably in the banking sector, where the same 12 % discounting rate was applied.

(7) See, for example, Commission Decisions 94/1073/EC concerning Bull (OJ L 386, 31.12.1994, p. 1), 95/547/EC concerning Crédit Lyonnais (OJ L 308, 21.12.1995, p. 92) and the Notice regarding Efim (OJ C 349, 29.12.1993, p. 2), and the judgment of the Court of Justice in Joined Cases C-278/92, C-279/92 and C-280/92 Hytasa [1994] ECR I-4103.

(8) Subject to there being guarantees given on commercial terms which do not constitute State aid.

(9) As can be seen from the recent withholding of support by private shareholders of a number of French banks.

(10) OJ C 368, 23.12.1994, p. 12.

(11*) In the published version of this Decision, some information has been omitted for reasons of confidentiality.

(12) See Senate of the French Republic, Banques: votre santé nous intéresse, Information Report by Mr Alain Lambert (Senator, General Rapporteur), on behalf of the Committee on financial affairs, budgetary control and the economic accounts of the nation, on the situation in and prospects for the French banking system, No 52, 1996-97.

(13) OJ L 135, 31.5.1994, p. 5.

(14) 'Duration` is a mathematical concept of the risk of an investment which describes the number of years needed to receive the present value of future flows of income from that investment (capital plus interest).

(15) GAN would hold directly 45 % of the capital of Socapi and indirectly, via its 20 % holding in CIC, another percentage of approximately 10 %, which would give it control.

(16) According to the annexes to the 1996 balance sheet, the turnover of GAN Belgium and CTR was FRF 550 million and FRF 1 880 million respectively.

(17) According to a study which recently appeared in 'Les Echos`, cited by the French authorities.