The measures intended to consolidate, restructure and privatise Crédit Foncier de France, in particular the government guarantee covering its debts announced by the Minister for Economic Affairs and Finance on 29 April 1996 and the FRF 1,85 billion increase in its capital carried out by Caisse des Dépôts et Consignations, constitute State aid within the meaning of Article 88(1) of the EC Treaty. These operations, the value of which is estimated at FRF 16 billion, are hereby declared compatible with the common market and with the EEA Agreement pursuant to Article 87(3)(c) of the EC Treaty and Article 61(3)(c) of the EEA Agreement.
Authorisation of the measures referred to in Article 1 is subject to France complying with the following conditions:
(a) The implementation of all the recovery measures and all aspects of the restructuring plan submitted to the Commission must be guaranteed;
(b) The conditions laid down in the restructuring plan may not be modified, after the conditions imposed by this Decision have been taken into account, without the Commission's prior agreement;
(c) Crédit Foncier de France must not be allowed to carry over tax losses in respect of the losses covered by the notified capital increase.
France shall cooperate fully in monitoring the implementation of this Decision and shall transmit the following documents to the Commission:
(a) A detailed report by the French authorities on application of the Commission Decision, implementation of the restructuring plan and privatisation of the bank. The report shall in particular:
- examine the viability of Crédit Foncier de France by presenting detailed results in relation to the estimates contained in the plan,
- give details of any government assistance to Crédit Foncier de France (by way of recapitalisation, finance, guarantees, etc.),
- analyse in detail developments in the process of selling Crédit Foncier de France.
This report shall be submitted to the Commission every six months following the date of notification of this Decision and for the last time after Crédit Foncier de France has been privatised;
(b) The balance sheets, profit and loss accounts and reports (annual and half-yearly) adopted by the Board of Directors of Crédit Foncier de France.
The Commission may request that these documents and implementation of the plan be evaluated by means of specialised audits. If so, the French authorities and Crédit Foncier de France shall cooperate in the performance of those audits.
This Decision is addressed to the French Republic.
Done at Brussels, 23 June 1999.
For the Commission
Karel Van Miert
Member of the Commission
(1) OJ C 275, 20.9.1996, p. 2.
(2) Standard & Poor's rating agency uses the following scale: AAA: the issuer's capacity to reimburse is extremely strong; AA: capacity is very strong; A: capacity is still strong but the issuer is susceptible to changes in economic conditions; BBB: capacity is adequate but with great sensitivity to changes in economic conditions; BB and B: speculative characteristics and uncertainty of payment; CCC, CC and C: doubtful claim; D: already in payment default. Moody's scale for investment grade risks is as follows: Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baa1, Baa2. The two scales are not comparable on a one-to-one basis.
(3) By CFF as security for the loan.
(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. 2).
(5) See the publication Moody's assigns bank financial strength ratings to 540 banks, Moody's, New York, September 1995.
(6) On average, the rates applicable were as follows: TIOP (Paris average interbank offered rate) + 0,25 % for drawings before 3 June 1996; TIOP +0,40 % for drawings between 3 June and 1 October 1996; TIOP + 0,675 % for drawings between 1 October 1996 and 31 March 1997.
(7) The net excess was FRF 27,8 billion at 31 December 1995, excluding doubtful claims and arrears, out of total outstanding claims of FRF 37,6 billion on that date.
(8) According to the Court of Justice, Article 87(1) of the Treaty does not distinguish between measures of state intervention by reference to their causes or aims but defines them in relation to their effects (see in particular its judgment of 26 September 1996 in Case C-241/94 France v Commission [1996] ECR I-4551).
(9) See footnote 4.
(10) OJ L 336, 30.12.1989, p. 14.
(11) OJ L 110, 28.4.1992, p. 52.
(12) The denominator of the solvency ratio comprises risk-adjusted assets.
(13) Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ C 368, 23.12.1994, p. 12).
(14) See footnote 13.
(15) See Commission Decision 98/490/EC of 20 May 1998 concerning aid granted by France to the Crédit Lyonnais group (OJ L 221, 8.8.1998, p. 72).
(16) See Table 1.
(17) Twenty-third Report on Competition Policy, point 403. The principles to which the Commission refers in order to determine whether a privatisation involves State aid had earlier been indicated to the French authorities in a letter from the Commission's Director-General for Competition dated 14 July 1993.
