ANNEX
List of commitments in state aid procedure SA.31883 Österreichische Volksbanken AG
Pursuant to Article 7(4) of Council Regulation (EC) No 659/1999, as amended, the Republic of Austria (“Austria”) hereby provides the following commitments concerning Österreichische Volksbanken-Aktiengesellschaft ("ÖVAG") in order to enable the European Commission (“the Commission”), by decision under Article 107(3)(b) of the Treaty on the Functioning of the European Union, to find aid granted to ÖVAG compatible with the internal market.
The commitments will take effect upon the date of adoption of the decision.
This text should be interpreted within the general framework of Community law and with reference to Council Regulation (EC) No 659/1999, as well as with regard to the decision to which the commitments are attached as commitments and/or conditions and obligations.
1. General
1.1.
Austria is to ensure that the restructuring plan (“restructuring plan”) for ÖVAG submitted on 4 September 2012 is correct and fully implemented.
1.2.
Austria is to ensure that the commitments (“commitments”) listed below are fully observed during the implementation of the restructuring plan.
1.3.
The restructuring phase will end on 31 December 2017. The following commitments apply during the restructuring phase, unless otherwise provided.
2. Core segment and winding-up segment
2.1.
ÖVAG has set up an internal winding-up segment to which certain assets are assigned in order to wind them up. The winding-up segment is to be managed as a segment in its own right with separate accounting in the sense of its own reporting procedure.
3. Reduction of the balance sheet total and RWA
3.1.
[Reduction of balance sheet total – group] Starting from ÖVAG’s audited balance sheet total of EUR 48 116 million on 31 December 2009, the group’s total balance sheet assets are to be reduced to EUR [26 000-28 000] million by 31 December 2013, to EUR [22 000-24 000] million by 31 December 2014, to EUR [20 000-22 000] million by 31 December 2015, to EUR [18 000-20 000] million by 31 December 2016, and to EUR 18 390 million by 31 December 2017.
3.2.
[Reduction of RWA – group] Starting from the group’s total risk-weighted assets (from total risk) of EUR 29 505 million on 31 December 2009, these assets are to be reduced to EUR [16 000-18 000] million by 31 December 2013, to EUR [14 000-16 000] million by 31 December 2014, to EUR 11 682 million by 31 December 2015, to EUR [10 000-12 000] million by 31 December 2016, and to EUR [10 000-12 000] million by 31 December 2017.
3.3.
[Reduction of balance sheet total – core segment] The total balance sheet assets in the core segment are to be reduced to EUR [15 000-17 000] million by 31 December 2013, to EUR [15 000-17 000] million by 31 December 2014, to EUR [14 000-16 000] million by 31 December 2015, to EUR [13 000-15 000] million by 31 December 2016, and to EUR [13 000-15 000] million by 31 December 2017. These amounts may be exceeded by 2 %, as long as this is the result of increased syndicate operations with the primary level, higher regulatory requirements for retaining liquidity or a greater need for refinancing the primary institutions than originally planned. Thorough justification must be provided to the monitoring trustee in cases where these amounts are exceeded.
3.4.
[RWA reduction – core segment] The total risk-weighted assets in the core segment (total risk) are to be reduced to EUR [5 500-6 500] million by 31 December 2013, to EUR [5 000-6 000] million by 31 December 2014, to EUR [5 000-6 000] million by 31 December 2015, to EUR [5 000-6 000] million by 31 December 2016, and to EUR [5 000-6 000] million by 31 December 2017. These amounts may be exceeded by 2 %, as long as this is the result of increased syndicate operations with the primary level, higher regulatory requirements for retaining liquidity or a greater need for refinancing the primary institutions than originally planned. Thorough justification must be provided to the monitoring trustee in cases where these amounts are exceeded.
3.5.
[Reduction of balance sheet total – winding-up segment] The total balance sheet assets in the winding-up segment are to be reduced to EUR [10 000-12 000] million by 31 December 2013, to EUR [6 000-8 000] million by 31 December 2014, to EUR [6 000-8 000] by 31 December 2015, to EUR [5 000-7 000] million by 31 December 2016, and to EUR [4 000-6 000] million by 31 December 2017.
3.6.
[RWA reduction – winding-up segment] The total risk-weighted assets in the winding-up segment (total risk) are to be reduced to EUR [11 000-13 000] million by 31 December 2013, to EUR [8 000-10 000] million by 31 December 2014, to EUR [5 000-7 000] million by 31 December 2015, to EUR [5 000-7 000] million by 31 December 2016, and to EUR [4 000-6 000] million by 31 December 2017.
3.7.
Deadlines in the winding-up segment are to be extended only if there is a realistic, factual and plausible possibility that an extension will make the financing easier to use in the future. Extensions are to be granted only three times and for a maximum of one year in each case. Justified exceptions with longer extension periods are to be disclosed to the monitoring trustee and adequately justified in each individual case. At the end of the restructuring period all winding-up activities must still be brought to a close as quickly as possible.
3.8.
When calculating the amounts in Nos 3.1 – 3.6, changes due to amended legal provisions resulting from the application of the CRD IV/CRR are not to be taken into account.
4. Restriction of business activities
4.1.
Only association-related business is to be carried out in the core business. In this connection, “association-related business” means that ÖVAG (i) is to act as a central organisation for the Volksbanken and is therefore to provide services to the directly affiliated institutions, and (ii) is to provide or procure products and services for the Volksbanken and their customers. ÖVAG is not to undertake in its own name or for its own account any credit or other lending business with third-party customers.
5. Discontinuation of business areas
5.1.
[ Discontinuation of business areas] ÖVAG is to implement the business model outlined in the restructuring plan, and in this connection to discontinue the business areas as described in the restructuring plan, with the following business areas in particular being discontinued completely:
5.1.1.
“Renewable energy” business area. The business area includes project financing in the “renewable energy” area in Austria, Germany and countries in Eastern Europe. This does not include financing provided by the primary level Volksbanken in order to take over syndicate shares, in so far as the primary bank takes on a share of the financing in proportion to its size.
5.1.2.
“Model financing” business area. The “model financing” business area concerns providing loans for purchasing and renovating dwellings in central locations using financial support available to creditworthy private individuals. This does not include financing provided by the primary level Volksbanken in order to take over syndicate shares, in so far as the primary bank takes on a share of the financing in proportion to its size.
5.2.
[Trade for own account] ÖVAG is to further refrain from conducting dedicated proprietary trading. This means that ÖVAG is to carry out only trading activities indicated in its trading book that are necessary either a) for accepting, transferring and executing its customers’ sales and purchase orders (i.e. trading with financial instruments as a service), or b) for hedging customer business or interest and liquidity management in the treasury sector or c) so that the economic transfer of balance sheet items to the restructuring unit or to third parties can be carried out. It is to be ensured in any case that these items are entered into only within the overall limit of EUR 3 million value-at-risk / one-day holding period / confidence level of 99 %, and where there is no danger to ÖVAG’s risk-bearing capacity or liquidity situation. Under no circumstances will ÖVAG carry out business activities that serve purely to make a profit apart from the above-mentioned purposes.
6. Sales
6.1.
[Sales] ÖVAG is to sell off the following entities completely (“signing”) by no later than the stated deadlines:
6.1.1.
Sale of all shares in the leasing subsidiary VBLI by 31 December [2013-2017];
6.1.2.
Sale of all shares in Malta/IK Malta Volksbank by 31 December [2013-2017];
6.1.3.
Sale of all shares in Volksbank Rumänien by 31 December [2013-2017];
6.1.4.
Sale of all shares in RZB by 31 December [2013-2017];
6.2.
The buyers of the entities stated in Nos 6.1.1 - 6.1.4 must be persons that are legally and economically independent of the Republic of Austria and VB Holding / the primary level banks
6.3.
If the shares mentioned in Nos 6.1.1 to 6.1.3 are not sold by the deadlines laid down there, ÖVAG will take all the measures available to it to end new business in these entities and to wind them up. ÖVAG will do everything in its power to reach an agreement with its joint partners early enough (6.1.1 and 6.1.3) to end the new business by the stipulated deadlines.
6.4.
If the shares mentioned in No 6.1.4 have not been sold by the deadline stipulated there, an official sales agent is to organise the sale.
7. Measures by DZ Bank, ERGO and RZB
7.1.
Austria is to ensure that Deutsche Zentral-Genossenschaftsbank (DZ Bank), ERGO Gruppe and Raiffeisen Zentralbank Österreich AG (RZB) implement the planned measures, as laid down in the restructuring agreement (“restructuring agreement”) reached on 26 April 2012 between the Republic of Austria and DZ Bank AG, ERGO Versicherung AG and ERGO Versicherungsgruppe AG, Raiffeisen Zentralbank Österreich AG, Volksbanken Holding eingetragene Genossenschaft, Österreichischer Genossenschaftsverband and ÖVAG.
8. Other rules of conduct / Corporate Governance
8.1.
[Ban on acquisitions] ÖVAG commits to refrain from making acquisitions. This applies to both the purchase of companies with their own legal structure, and shares in companies, as well as asset bundles that represent a commercial transaction or a branch of activity . This does not apply to acquisitions that must be made in order to maintain financial and/or association-related stability, or in the interests of effective competition, provided that they have been approved beforehand by the Commission. This does not apply either to acquisitions that belong, in terms of the management of existing obligations of customers in financial difficulty, to a bank's normal ongoing business. The obligation is to apply until the restructuring phase ends.
8.2.
[Dividend ban] ÖVAG will not pay dividends in the period up to and including the financial year ending 31 December 2017. The payments pursuant to No 10 are not affected by this, provided this is separable in a legal sense.
8.3.
[Hybrids] Until 31 December 2017, ÖVAG may not make any payments in respect of profit-related equity instruments (such as hybrid financial instruments and profit participation certificates (Genussscheine), in so far as those payments are not owed on the basis of a contract or the law. If ÖVAG’s balance sheet were to indicate a loss before the adjustment of reserves and retained earnings, the above-mentioned instruments must also participate fully in the loss pursuant to the possibilities under supervisory and civil law. In this connection, ÖVAG is to undertake not to draw on reserves in the case of losses until 31 December 2017.
8.4.
[Ban on price leadership] In the area of deposit services, the Live Bank is prohibited until 31 December 2015 from offering better interest rate conditions (for all maturities) than its competitor with the third-best conditions on the Austrian market for direct online banking without the Commission's prior approval.
8.5.
[Advertising] ÖVAG must not use the granting of the aid measures or any advantages arising therefrom for advertising purposes.
8.6.
[Remuneration of bodies, employees and essential agents] ÖVAG must verify the incentive effect and appropriateness of its remuneration systems and ensure, using the possibilities under civil law, that they do not result in exposure to undue risks, are oriented towards sustainable, long-term company objectives, and are transparent.
8.7.
[Other rules of conduct] ÖVAG is to continue expansion of its risk-monitoring operations and to conduct a commercial policy that is prudent, sound and oriented towards sustainability.
9. ÖVAG and primary institutions
9.1.
[Remuneration for liquidity reserves] Pursuant to Section 25(13) of the Austrian Banking Act, ÖVAG is to pay a remuneration for the liquidity reserve to the primary institutions of no more than the three-month Euribor rate plus [40-70] basis points ("bp") for their deposits. On 1 January 2014 and 1 January 2015 the cost rate will be reduced in each case by [5-10] bp, and by a further [3-7] bp on 1 January 2016 and 1 January 2017, so that the conditions are the same as the three-month Euribor rate plus [20-40] bp from 1 January 2017. With the Commission’s explicit approval other fund transfer pricing components can also be used, provided it can be demonstrated that the profit from reducing the conditions for interest paid on the liquidity reserves as described here, is at least achieved.
9.2.
[Fees] ÖVAG is to retain all the fees it charges for business brought in through the LiveBank's website.
9.3.
[Distribution of dividends to the primary institutions] Dividends may be distributed to the primary institutions within the framework laid down in the restructuring agreement, provided that the limit of EUR [7-10] million mentioned there under No 7.2 is reduced to EUR [5-8] million and only to the extent that, where dividends are to be distributed under No 7.2, sufficient profits were made and also new, external base capital was raised (net, after the deduction of repayments) to at least cover (compensation for profits not retained) the amount distributed (to equity investors and to the Federal Government).
10. Remuneration of the aid measures
10.1.
[Remuneration of the asset guarantee] The asset guarantee of EUR 100 million provided by Austria is to be remunerated with a non-profit-related bonus of 10 % p.a.
10.2.
[Remuneration of the participation capital] The participation capital provided by the State is to be remunerated as laid down in the agreement on principle.
11. Exit strategy for asset guarantee, participation capital and share capital
11.1.
[Return of the asset guarantee] The asset guarantee of EUR 100 million provided by Austria is to be set up in terms of its maturity in such a way that it ends immediately after 31 December 2015.
11.2.
[Repayment of the participation capital] ÖVAG undertakes to take every suitable measure to relieve the Republic of Austria of half of the burden of its position as a participant (EUR 150 million) in the first half of 2017 and of the entire burden by immediately after 31 December 2017 at the latest. The primary banks are to play a part in realising this, as far as the minimum regulatory requirements allow.
11.3.
[Exit strategy] Austria does not consider itself as the long-term owner of ÖVAG and will therefore attempt to sell the subscribed shares again as quickly as possible, taking into account budgetary interests and the provisions of the Austrian Banking Act and Section 2(3) of the Austrian Financial Market Stability Act.
12. Monitoring trustee
12.1.
Austria is to ensure that the full and correct implementation of ÖVAG’s restructuring plan and the full and correct implementation of all commitments within this commitments document are continuously monitored by an independent, sufficiently qualified monitoring trustee who is obliged to maintain confidentiality.
12.2.
The appointment, duties, obligations and discharge of the monitoring trustee must follow the procedures set out in the “Trustee” Annex.
12.3.
Austria is to ensure that, during the implementation of the decision, the Commission or the trustee has unrestricted access to all information needed to monitor the implementation of this decision. The Commission or the trustee may ask ÖVAG for explanations and clarifications. Austria and ÖVAG are to cooperate fully with the Commission and the monitoring trustee with regard to all enquiries associated with monitoring of the implementation of this decision.
