Annex VIII: Burden-sharing by shareholders

Bank

Nationalisation

Dilution

Capital raising

Remaining at the bad bank

Write-down

Dividend ban

OVAGC

Dilution

Capital raising

Dividend ban

“The capital increase is to be conducted in two steps. First, the bank's capital is reduced by 70% to offset the accumulated losses. That capital cut also reduces pro rata the PS which Austria injected in 2009. In a second step, ÖVAG receives fresh capital totalling EUR 484 million. EUR 250 million thereof is to be subscribed by Austria, the rest by the Volksbanken. Austria and the Volksbanken will subscribe the shares at the price of EUR 2.181 per share. As a result, the State will obtain a 43.4% stake in the bank and become the second-biggest shareholder after the Volksbanken (50.2%). The stakes of the other shareholders, which do not participate in the capital injection, will be diluted: DZ-Bank 3.8%, ERGO 1.5%, RZB 0.9%, free float 0.1%.”1

BAWAGC

Capital raising

Dividend ban

“In July 2009 the bank successfully placed EUR 80 million Tier 2 capital on the market, and in August 2009 the bank received EUR 205 million of capital through a shareholder contribution.”2

Hypo TirolC

Dividend ban

“Die Hypo Tirol hat zugesagt, im Falle von Verlusten im operativen Geschäft keine Kuponzahlungen vorzunehmen. Auf diese Weise wird im Einklang mit Randnummer 26 der Umstrukturierungsmitteilung sichergestellt, dass die Bank keine staatlichen Beihilfen zur Zahlung einer Vergütung für Eigenmittel verwendet, wenn die entsprechenden Geschäfte keine ausreichenden Gewinne abwerfen.”3

HGAAS/C/W

Nationalisation

“First, all previous shareholders of HGAA have sold their shares to the Republic of Austria for a symbolic price of one euro which reduced the risk that the aid measures benefit the former shareholders. The former owners have also provided HGAA with capital or liquidity, which have been used to cover losses and to improve the liquidity situation. The majority shareholder of HGAA at the time of that sale was BayernLB. In total, BayernLB has contributed about EUR 1.5 billion in capital whilst renouncing further ownership rights, not even any prospect of further remuneration. BayernLB also contributed about EUR 4.3 billion in liquidity to HGAA. Furthermore, BayernLB faced a significant write-down loss when selling its HGAA shares which contributes to addressing moral hazard in line with point 22 of the Restructuring Communication.”4

KA (2011)S/C/W

Nationalisation

Dividend ban

“As regards burden sharing related to the restructuring process, the Commission takes note of several positive elements. First, previous shareholders have been almost entirely wiped out by the nationalisation, and within the nationalisation were required to transform claims against KA into hybrid capital (participation certificates). Moreover, hybrid issuances (including the participation certificates from the previous owners) have been split between KA Neu and KA Finanz […], thus ensuring additional burden sharing, since the potential profits of KA Finanz will be skimmed off by the guarantee fees to be paid to the state.”5

KBCC

Dividend ban

This case is somewhat remarkable, because there is no clear indication of burden-sharing by shareholders (apart from the dividend ban).

EthiasC

Dilution

Dividend ban

“The Commission observes that the historic owners of Ethias have contributed to the costs of restructuring. In particular, the historic owners, if considered as a whole, have lost control of the company, as their stake was diluted from 100% to 25%.”6

Fortis (2008)S/C/T/C

Even though there was burden-sharing by shareholders (because Fortis was broken-up and most activities were sold), the decision does not really mention the aspect of burden-sharing by shareholders.

Dexia (2010)C

Dilution

“Dexia, its shareholders and the Member States concerned have already made an own contribution to the restructuring effort in particular through the dilution of the share of the capital stock held by existing shareholders when the bank's capital was increased (the French and Belgian authorities directly subscribed to EUR 3 billion of the EUR 6.4 billion capital increase announced in September 2008).”7

Dexia (2012)S/C/T/W

Dilution

“The EUR 5,5 billion dilution of existing shareholdings planned by the recapitalisation by the Belgian and French States will be considerable. Existing shareholders, other than the Belgian and French States, will see their holdings drastically diluted from 88,54% before the capital increase to 5,58% thereafter.”8

FIBC

“When the State provides a capital injection, equity capital and subordinated debt holders must contribute to reducing the capital shortfall to the maximum extent. Such contributions can take the form of either a conversion into Common Equity Tier 1 or a write-down of the principal of the instruments. In the absence of any capital need in the case of FIB the Commission will not require such measures.”9

CCB (2014)C

Dilution

“Without aid, the capital of the Cooperative group would have become negative in 2014. As a consequence of the State's capital injection in the CCB, the State will own 99% of the shares and voting rights of the CCB. Its existing shareholders, the CCIs, will be completely diluted and left with 1%.”10

CCB (2015)C

Dilution

“The 1% shareholders of the CCB, the CCB Holding Company, and the 1% shareholders of the CCIs, the old members, who will exchange their shares in the CCIs for shares in the CCB, will hold a combined share with the range of 0.77%-0.98% in the CCB. They will therefore be further diluted by the new recapitalisation and represents only a negligible shareholding. Hence the requirements of the 2011 Prolongation Communication and of the 2013 Banking Communication are complied with.”11

AmagerbankenS/T/W

Remaining at the bad bank

“The features of the burden-sharing foreseen in the conditional transfer agreement ensure that losses on the book of Amagerbanken will be borne in full by Amagerbanken's owners and unguar-anteed creditors. Accordingly, the subordinated debt holders and shareholders have suffered 100% losses. They could only benefit from proceeds of sale and windingdown of the New Bank in the context of the earn-out mechanism, and would only receive a positive contribution after full repayment of aid received (increased by an annual interest payment of 10%). Such a prospect for shareholders and unguaranteed creditors is thus very unlikely in view of the assessment of the value of the assets transferred to the New Bank.”12

Eik banki

Fionia BankS/T/W

Remaining at the bad bank

“The Commission considers burden-sharing to be sufficient as the old shareholders lost control of the bank and all financial stakes therein without any compensation (except for the theoretical Earn- Out facility, which is deemed justified as being necessary and proportionate to ensure the quick and smooth implementation of the liquidation).”13

Roskilde BankS/T/W

Remaining at the bad bank

“The investors having invested in old RB's equity and subordinated capital may only get some future compensation via a so-called earnout mechanism after the DNB and DPB are repaid at subscription value plus interest.”14

FIH HoldingC

Dividend ban

“FIH has committed not to pay any dividends during the restructuring phase and to repay a previous State recapitalisation of DKK 1,9 billion. Further, FIH will not make any coupon pay-ments to investors in hybrid instruments or any instrument for which financial institutions have discretion to pay coupons or to call, regardless of their regulatory classification, including subordinated debt instruments, if no legal obligation to make payments exists.”15

CIFW

The limited burden-sharing in this case was justified.

BayernLB C

Dilution

Capital raising

Dividend ban

“Another aspect concerns the savings banks association, which did not participate in the 2008 rescue measures even though it was a shareholder in BayernLB. Because it did not participate in the rescue, the savings banks association's stake has been significantly diluted, but it has in the meantime agreed to various additional contributions. (…) As a result of all these measures the shareholding that was initially diluted to 6% will rise significantly, potentially up to 25%.”16

CommerzbankC

Dilution

Capital raising

Dividend ban

“The Commission is satisfied that, in addition to the earlier capital increase, the planned capital increase is necessary so that Commerzbank can meet both internal and external demands and that it has adequate risk buffers at its disposal for the near future.”17 “Furthermore, the owners are to participate in the costs of restructuring the bank as much as possible. The existing shareholders and holders of hybrid capital instruments have not taken part in the capital increases, with the exception of Allianz, whose contribution must be attributed mainly to its desire to complete the takeover of Dresdner Bank as quickly as possible. Nevertheless they shoulder part of the burden through the ban on dividend payments and on using reserves for coupon payments. The Commission is convinced that there is a limit to imposing a heavier burden on the holders of hybrid capital instruments at Commerzbank.”18

HREC

Nationalisation

“It should also be borne in mind that the bank was taken into public ownership and that the compensation received by its former shareholders was based on the value of the company without state support. That outcome is a positive element from a state aid point of view and means that the former shareholders have been wiped out and thus can be considered as having sufficiently contributed to the costs of the restructuring of HRE.”19

HSH Nordbank C

Dilution

Dividend ban

“The Commission concludes that adequate own contribution and burden sharing of the minority shareholders can be achieved, and consequently that the aid can be viewed as compatible subject to the conditions described in recitals 262, 202 to 208 and 241 to 244.”20

IKBC

Capital raising

“A significant part of the restructuring of the portfolios is borne by the company itself and the previous and new private shareholders, comprising in particular the participation of the banking associations, IKB’s own funds and Lone Star’s capital injection.”21

LBBWC

Capital raising

Dividend ban

“As the shareholders have injected capital into the bank pro rata to their respective shareholding, the burdens are at least equitably distributed among the groups of shareholders.”22

NordLBC

Capital raising

Dividend ban

“Another aspect concerns the Savings Banks' Association, the second group of shareholders of NORD/LB. The Commission noted that they have also contributed to the restructuring of the bank both in the conversion of capital as well as in the provision of new capital.”23

SachsenLB T

“In addition, the Commission recognises that the old owners of the bank and the management are not involved any more in the activities of Sachsen LB, which provides a valuable signal against moral hazard.”24

Sparkasse KolnBonn C

No mention of burden-sharing by shareholders. This could be explained by the fact that there were no private shareholders; the ultimate owners of Sparkasse KolnBonn were the city of Koln (70%) and Bonn (30%).25

WestLB (2009)C

Dividend ban

The owners of WestLB were required to sell their shares. However, this was not mentioned in the context of burden-sharing, but in the context of the restoration of long-term viability.

WestLB (2011)W

“In the cases of Northern Rock and HRE, burden sharing was achieved by nationalisation. As in those cases, the shareholders here will lose all their equity. Moreover, WestLB's shareholders, as well as SoFFin as the principal provider of hybrid capital, will take individual responsibility for the different parts into which WestLB is to be split and provide additional capital.”26

Alpha BankC

Dilution

Capital raising

Dividend ban

“The historical shareholders of the Bank were diluted by the rights issue completed in 2009 and then again by the HFSF recapitalisation (measure B4) and private capital raising of 2013 and March 2014. For instance, the stake held by the shareholders of the Bank, which at the time included the investors that injected money in 2009, was reduced from 100% prior to the Spring 2013 recapitalisation to only 4,9% after that recapitalisation. In addition, the Bank has not paid any dividend in cash since 2008. In addition to that burden-sharing by historical shareholders, the Bank has raised a significant amount of private capital since the crisis started in 2008, that is to say EUR 986 million in 2009, EUR 550 million in 2013 and EUR 1 200 million in 2014.”27

EFG Eurobank C

Dilution

Capital raising

Dividend ban

“The existing shareholders of the Bank were heavily diluted by the Spring 2013 recapitalisation (measure B4). Indeed, the stake held by existing shareholders had been reduced from 100% prior to the Spring 2013 recapitalisation to only 1,44%. The Commission also notes that the Bank has paid no cash dividend since 2008. Finally the Commission takes a favourable view of the fact that the HFSF will inject additional capital only if the Bank fails to raise it from the market at a price deemed reasonable and established on the basis of two independent valuators.”28

Pireaus BankC

Dilution

Capital raising

Dividend ban

“The historical shareholders of the Bank were diluted by the rights issue completed in 2009115 and then again by the HFSF recapitalisation (measure B4) and private capital raising of 2013 and March 2014. For instance, the stake held by the shareholders of the Bank, which at the time included the investors that injected money in 2009, was reduced from 100% prior to the Spring 2013 recapitalisation to only 2,3% after that recapitalisation. In addition, the Bank has not paid any dividend in cash since 2008. In addition to that burden-sharing by historical shareholders, the Bank has raised a significant amount of private capital since the crisis started in 2008, that is to say EUR 807 million in 2009, EUR 1 444 million in 2013 and EUR 1 750 million in 2014.”29

National Bank of GreeceC

Dilution

Capital raising

Dividend ban

“The existing shareholders of the Bank were successively diluted by the rights issues completed in 2009 and 2010 and then by the HFSF recapitalisation. The stake held by the shareholders of the Bank was reduced from 100% prior to the Spring 2013 recapitalisation to only 5,1% afterwards. In addition, no dividend has been paid to ordinary shareholders since 2007 or to US preference shareholders since 2009. Besides that burden-sharing by historical shareholders, the Bank has raised a significant amount of capital since the crisis started in late 2008. That capital raised has contributed to reducing the amount of capital needs which had to be filled by State aid.”30

T BankS/T/W

Remaining at the bad bank

“The shareholders and subordinated debt holders are not transferred and remain in the entity in liquidation. They will be entitled to proceeds from the liquidation only if the proceeds are sufficient to repay first the Resolution Scheme, which has a priority claim over the other creditors. Knowing that there are no more assets in T Bank, it is very likely that the shareholders and subordinated debt holders will not get back their investments.”31

TT Hellenic Postbank S/T/W

Remaining at the bad bank

“Concerning burden-sharing of shareholders and subordinated debt holders, the Commission has already established, in recital 100 of the New TT Opening Decision, that the shareholders and subordinated debt holders were not transferred to New TT Bank but have remained in TT Bank, that is to say, the entity in liquidation. Hence, the Commission considered that sufficient burden-sharing of shareholders and subordinated debt holders was achieved.”32

(Nea) Proton BankS/T/W

Remaining at the bad bank

“Concerning burden-sharing of shareholders and subordinated debt holders, the Commission notes that the shareholders and subordinated debt holders were not transferred to Nea Proton Bank but have remained in the entity in liquidation. Therefore, there is a high probability that they will lose their investments. That burden-sharing reduces the aid amount needed. Hence, the Commission considers that sufficient burden-sharing of shareholders and subordinated debt holders is achieved.”33

ATE (2011) C

Dilution

“The current shareholders will be diluted in the context of the upcoming capital increase of EUR 1,259.5 million, as the State will possibly participate for a higher proportion than its current shareholdership in ATE.”34

ATE (2013)S/T/W

Remaining at the bad bank

“The Commission also takes positive note of the fact that the shareholders of ATE Bank were completely wiped out. Moreover, the Greek authorities did not transfer shares or subordinated debt to Piraeus Bank.”35

Panellinia BankS/T/W

Remaining at the bad bank

“The equity of the Bank, which consists only of ordinary shares and of preference shares owned by the Hellenic Republic, will not be transferred, but will be left in the liquidated entity. Therefore, the shareholders are fully wiped out and suffer 100% losses.”36

FHBC

Dividend ban

“The Hungarian authorities also note that FHB has not paid dividends for several years in succession, and it has only purchased back a minor portion of its shares relative to the total value of the shareholder’s equity. Accordingly, as the amount of funds returned to owners and shareholders has been low over the past years, an appropriate burden-sharing has been ensured.”37

MKBC

Write-down

Dividend ban

“The sole shareholder of MKB Bank, the Hungarian State, will be fully written down, and the resolution fund via the RAMV will become the sole shareholder of the core bank.”38

Anglo/ INBSW

Nationalisation

Dilution

“In the particular case of Anglo, private shareholders have been fully 'wiped out' and the bank was fully nationalised. Concerning INBS, prior to the State recapitalisation INBS was owned by its members. In particular "share members" (persons who have a deposit account in INBS) had a right to gains on any surplus of assets realised in case of its demutualisation (transformation of INBS into an ordinary bank), winding-down or dissolution. As a result of the first recapitalisation of INBS, the State has taken full control of INBS via the issuance of Special Investment Shares, following which the members have lost all rights to gains on surpluses of the assets realised to the benefit of the State (for instance, in case of a sale of INBS). As a result, the economic rights of the share members have been completely 'wiped out'.”39

AIB/EBSC

Dilution

“Quasi full burden sharing has been achieved from the former owners of AIB. Shareholders have been wiped out and the State currently owns 99,8% of the Bank.”40

BOI (2010) C

Dilution

“As regards the existing shareholders, they have been significantly diluted by the participation of the State and private investors in the capital raising exercise described in paragraphs (81)- (85) and the following. In that way, they bore the consequence of the losses registered by BOI.”41 “By the end of the capital-raising exercise, the stake of incumbent shareholdings in BOI will be around 30% (compared with 100% just after the EUR 3.5 billion rescue recapitalisation in March 2009 and 84% following the payment of coupons on the government's preference shares in February 2010).”42

BOI (2011) C

Dilution

Capital raising

“The Commission further notes that the need for additional State aid has been limited to a significant extent by the liability management exercises carried out in July and December 2011, while new capital has been raised on the market. Incumbent shareholders had to provide fresh capital to finance the restructuring costs, or significantly diluted in the capital raise.”43

IL&P (PTSB)C

Dilution

“Almost complete burden-sharing has been achieved from the former owners of PTSB. Shareholders have been diluted and the State currently owns 99.2% of PTSB. Therefore, the amount of burden-sharing from the former owners is significant and adequate.”44

Quinn Insurance S/T/W

Remaining at the bad bank

“The former shareholders of QIL will in any case not benefit from the measures taken by Ireland to aid the administration of QIL. They are part of the rump of QIL that will be wound- down. They rank last or second-last and will only be paid out after all the other creditors have been compensated. The Commission notes that legally the rump of QIL is still owned by its shareholder, the Quinn Group (which is itself under share receivership). However, the Quinn Group will receive money only if the ICF is repaid in full. Given that the expected gap in the rump of QIL is estimated at EUR 738 million, there is no prospect of future economic value in that ownership of the rump.”45

MPSC

Dilution

MPS was recapitalised in the form of ‘new instruments’. The restructuring plan of MPS included an accelerated repayment schedule with respect to the ‘new instruments’. To that end, MPS intended to increase its capital by at least EUR 2,5 billion.46 This capital increase would significantly dilute the existing shareholders. If the capital increase would not be successful, then the ‘new instruments’ would be converted into normal shares. This conversion would also result in the dilution of existing shareholders.

BRCS/T/W

Remaining at the bad bank

Write-down

“Because BRC has currently negative equity, its shareholders will be fully written down. Furthermore, subordinated debt is not transferred to ICCREA but remains in the entity in liquidation.”47

Banca Tercas

Write-down

“The Commission observes that a complete write-down of shareholders' equity was performed in Tercas.”48 “On 27 July 2014, the Tercas’ shareholders’ meeting decided: 1) to partially cover the losses inter alia by reducing capital to zero with cancellation of all the circulating ordinary shares; and 2) to increase the capital up to EUR 230 million with issuance of new ordinary shares offered exclusively to BPB.”49

Parex bankaS/C/W

Nationalisation

Dilution

“As a result of nationalization, the former majority shareholders in Parex banka were wiped out (see recital (13)). Due to the subsequent recapitalisation of Parex banka by the State and the EBRD, the minority shareholders were diluted (from previous 15.2% to 3.7% as at 7 July 2010).”50

MLB

“It has already been concluded in the opening decision that the base case scenario contained in the sales strategy ensures the limitation of the aid needed for the phasing-out of the commercial activities of MLB to the minimum. The actual execution of that plan does not change that assessment.”51 “The bank and its capital holders should contribute to the restructuring as much as possible with their own resources. That requirement ensures that rescued banks bear adequate responsibility for the consequences of their past behaviour and creates appropriate incentives for their future behaviour. In the present case the Commission notes that all the capital of the bank was held by the State. By means of a sale, the State discontinues the commercial activities of MLB.”52

LCCUC

Capital raising

Dividend ban

“In that regard, the Commission observes that the member credit unions provided capital covering 68% of the capital needs of the LCCU which was the maximum amount they could contribute in 2011 without jeopardizing their own existence.”53

AB Ukio BankasS/T/W

Remaining at the bad bank

“Although the shareholders of Ukio bank do not cease to be its owners they will participate in the restructuring costs. First, they contributed to the costs of the restructuring by absorbing the bank’s losses. Second, in view of the capital gap it is not expected that either the shareholders or subordinated loans holders will receive any compensation as a result of the bankruptcy pro-ceedings.”54

Kaupthing Bank LuxembourgS/T/W

Write-down

“First of all, it should be noted that the restructuring plan provides that the Bank’s shareholder (that is to say the Icelandic parent company) must reduce its capital in the Bank to zero, with the result that it ceases to be a shareholder without receiving any compensation. To that degree, the Bank’s shareholder will have participated in the costs by absorbing the losses to the maximum extent of its capital. […].”55

ABN AMROC

Burden-sharing by shareholders not applicable in this case, since the Dutch State acquired Fortis Bank Nederland (and thus ABN AMRO).

INGC

Dilution

“Furthermore, the restructuring plan foresees that ING will raise EUR 5 billion of capital via a share offering in 2009, which will result in a dilution of existing shareholder rights. This can be considered as a significant own contribution of existing capital providers.”56

SNS REAAL (2010)C

Dilution

“The shareholders of SNS have been diluted by the EUR 135 million capital increase in September 2009 (equivalent to 10% of shares). This capital increase was used to partly repay the State and the Foundation. The Foundation is entitled to be repaid pro rata with the State but it decided to waive this right and to be repaid a smaller amount in 2009 (with the remainder to be repaid in the coming years). It also accepted to be repaid at 100% (and not at 120%). The Commission considers that the dilution of shareholders and the waiving of payments by the Foundation, as the main strategic shareholder, provides for appropriate burden-sharing.”57

SNS REAAL (2013)C

Nationalisation

“As regards the increased burden-sharing requirements under the 2013 Banking Communication, the Commission notes that the Dutch State has not bailed out the shareholders of SNS REAAL and the hybrid debt-holders of SNS REAAL and SNS Bank. As described in recital (13), those shareholders and hybrid debt-holders were expropriated and will only receive a fair compensation in line with the relevant provisions of Dutch law.”58

AegonC

Dilution

Dividend ban

“Burden-sharing is ensured by the contribution of capital and hybrid instrument holders of AEGON to the costs of the restructuring. In this respect it is noted first that the capital increase of August 2009, which was used to repay one-third of the State capital, provided burden-sharing through the dilution of existing shareholders. Second, the commitment by the Netherlands whereby AEGON will not make dividend payments to its common stock holders and will not call or repurchase any of the outstanding hybrid securities prior to the full repayment of the CCS ensures that the owners and hybrid instrument holders of AEGON contribute to the restruc-turing.”59

CGDC

Dividend ban

“Ban on dividend, coupon and interest payments: CGD will not (and shall procure that none of its subsidiary undertakings shall) make any payments of dividends, coupons or interest to holders of preference shares and subordinated debt, in so far as those payments are not owed on the basis of contractual or legal obligations.”60NB: this case was characterised by a breach of the dividend ban.

BPIC

Dividend ban

NB: this case was characterised by a breach of the dividend ban.

BCPC

Dilution

Capital raising

Dividend ban

In the decision on BCP, the Commission noted positively that 14% of the capital shortfall was provided by private investors.61 In 2012, BCP not only issued CoCos subscribed by the Portuguese State, BCP also issued ordinary shares. These shares were offered to the current shareholders of BCP for subscription through the exercise of their pre-emptive subscription rights.62 The issuance of ordinary shares diminished the State’s recapitalisation to 86% of the identified total capital shortfall.

BPNT

Nationalisation

“In November 2008 Portugal nationalised BPN by force of law at a zero price.”63 “In the present case, the Commission welcomes the fact that the shareholders have lost all their stake in the bank without any compensation.”64

BESS/C/W

Remaining at the bad bank

“All shareholders and subordinated creditors will be left in the Bad Bank.”65

BanifS/T/W

Write-down

“As resolution measure, Portugal will apply the Sale of Business resolution tool combined with the Bail-in tool which under the Portuguese implementation law of Directive 2014/59/EU is already applicable in 2015.”66 “Using its resolution powers, the resolution authority has generated EUR 431 million of capital through applying bail-in to holders of subordinated debt as well as liabilities from other credit institutions. This has to be added to the amount of shareholder capital still present in Banif of EUR 650 million bringing the total up to EUR 1 081 million.”67

AbankaC

Nationalisation

“To ensure adequate burden-sharing and participation of Abanka’s existing investors in the restructuring, the equity holders and all subordinated debt holders were written down in full prior to the first recapitalisation.”68

NKBMC

Nationalisation

“In that respect, Slovenia committed that before any State aid is granted to NKBM (i.e. the second recapitalisation and the transfer of impaired assets to the BAMC), the latter will write- down in full its shareholders’ equity and outstanding subordinated debts so ensuring compliance with the requirements of 2013 Banking Communication.”69

NLBC

Nationalisation

“In that respect, Slovenia committed that before any State aid is granted to NLB (i.e. the third recapitalisation and the transfer of impaired assets to the BAMC), the latter will write-down in full its shareholders’ equity and outstanding subordinated debts so ensuring compliance with the requirements of 2013 Banking Communication.”70

Factor BankaW

Nationalisation

“The State recapitalisation will only be implemented after the complete implementation of the wipe-out of the shareholders’ equity and subordinated debts. All existing shareholders and subordinated debt holders therefore fully contribute to the orderly winding down costs of the Bank prior to the granting of the State support.”71

Probanka W

Nationalisation

“The State recapitalisation will only be implemented after the complete implementation of the wipe-out of the shareholders’ equity and subordinated debts. All existing shareholders and subordinated debt holders therefore fully contribute to the orderly winding down costs of the Bank prior to the granting of the State support.”72

Catalunya BancC

Dilution

“With the implementation of the Restructuring Plan, all existing shareholders will be asked to bear losses in proportion to their stakes prior to any new capital injection under the MoU. As a result and given the significant capital needs of the Bank, all existing shareholders in the Bank other than the FROB, the founding savings banks, will be fully diluted and will lose all economic claims and all political/voting rights over the Bank.”73

NCG BancoC

Dilution

“As established in recital (78), the State will acquire a significant ownership of NCG and its previous owners will be fully wiped out.”74 “The conversion of the convertible preference shares issued to the FROB in 2010 and the new capital injection mean that the old owners of NCG shares will lose all economic claims and other rights over NCG.”75

BFAC

Dilution

“As a result of that conversion, as of June 2012 the FROB owned 100% of the ordinary shares in BFA. Accordingly, the previous equity holders (the seven founding savings banks) lost all economic and political rights over the BFA Group.”76 “Based on the assessment made by the Spanish authorities on the economic value of BFA, the FROB will control 100% of BFA’s capital. As a result, the seven founding savings banks will lose all control over BFA.”77

Banco Mare NostrumC

Dilution

“As established in recital (62), the State will acquire a significant ownership of BMN and the stake of its previous owners will be significantly reduced. The State will consequently receive a large part of future profits and/or the revenue from the envisaged listing of BMN in the future. The Commission therefore considers the level of remuneration associated with the State’s stake in BMN of at least 64% as appropriate.”78 “All existing shareholders will bear losses proportionate to their stake prior to the injection of new capital and the SLE described below. Moreover, the mandatorily convertible contingent debt as described in recital (18) will be converted into equity prior to these measures. The consecutive absorption of accounting losses as of 31 December 2012 will lead to a remaining equity of approx-imately EUR [200 – 300] million.”79

Liberbank C

This decision is remarkable in the sense that there is no mention of burden-sharing by share- holders.

Banco de ValenciaT

Dilution

“Furthermore, the offer is made under the following assumptions: (i) The share purchase will be made only after the General Assembly of BVA adopts a capital reduction and, simultaneously, an increase of capital corresponding to the capital injection of EUR 4.5 billion by the FROB.”80 “The unitary nominal value of EUR 0.2 per share of existing minority shareholders will be reduced to the lowest possible unitary nominal value of EUR 0.01, as a result of the reduction and simultaneous increase of capital that the FROB will execute with effect of 30 October 2012. The capital reduction will result in a reduction of 95% of the nominal value of the shares.”81 “In this regard, the Commission observes that BVA’s previous owners will be fully wiped out as a result of the measures granted in the context of its restructuring, except for the minor compensation as described in recital (73).”82

Banco CAMT

Dilution

“As regards the contribution of Banco CAM to the financing of the restructuring costs, the Commission observes that the stakeholders of that credit institution have suffered significant losses. More specifically, the cuotas participativas – equity instruments with non-voting rights which allow investors to receive a percentage of the after-tax profits distributed by the issuing company – have lost all value.”83 “Furthermore, since the FROB injected capital in the form of ordinary shares, it controls 100% of the voting rights in Banco CAM’s General Assembly.”84

UNNIM BancT

Dilution

“The Commission notes that the takeover of UNNIM Banc by BBVA results both in the total wiping out of former UNNIM Banc shareholders and in the disappearance of UNNIM Banc as a standalone entity.”85

CajatresT

Dilution

“Finally, the restructuring will take place through the merger of Cajatres into Ibercaja. Cajatres’ incumbent shareholders will hold a stake of around [0-20]% in the combined entity and will therefore experience a very significant dilution of their shareholdings as part of the restructuring effort.”86

Banco GallecoT

Dilution

“On 29 January 2013, Banco Gallego’s shareholders decided to reduce the equity of the Bank to zero by absorbing losses and, simultaneously, NCG increased the capital of Banco Gallego. As a result of that operation, on 18 March 2013, the FROB, indirectly through NCG, held 99.95% of Banco Gallego, the rest remaining in the hands of private shareholders.”87 “As described in recital (7) the existing private shareholders were nearly fully diluted as a result of a capital increase conducted by NCG on 18 March 2013.”88 “In that regard, the Commission observes that Banco Gallego’s previous owners were fully wiped out.”89

CajaSurT

“The Commission observes that the stakeholders of the credit institution lost ownership.”90

Caja Castilla-La ManchaT

“The Commission observes that the stakeholders of the credit institution lost ownership.”91

Banco CEISSC

“The absorption of accounting losses as of 31 December 2012, followed by the conversion of the FROB Preference Shares and the required new capital injection to meet regulatory solvency levels mean that all existing shareholder will be asked to bear losses in proportion to their stakes prior to any new capital injection under the MoU.”92

LBGC

Dilution

Dividend ban

“As regards the existing shareholders, they have been diluted by the State and private recapitalisations described above. In that way, they bore the consequence of the losses registered by LBG.”93

RBSC

Dilution

Dividend ban

“As regards the contribution of the existing shareholders, the Commission considers positively the fact that in exchange for its £20 billion recapitalisation in the group, the State received shares issued at a discount compared to the stock market price at the time of the announcement. This allowed it to own around 70% of RBS. This means that the aid did not wholly protect RBS’s shareholders against the consequences of the group’s past losses. On the contrary, they have been strongly diluted by the State recapitalisations. In that way, they bore the consequence of the losses registered by RBS. In addition, in case of conversion of the B shares in ordinary shares, it will lead to a further dilution of the existing shareholders.”94

B&BS/T/W

Nationalisation

“Moreover, the UK has taken measures to minimise moral hazard, notably by excluding shareholders and possibly certain types of creditors from receiving the benefit of any aid in the context of the controlled winding-up procedure. This was achieved through the nationalisation of B&B by which its former shareholders were wiped-out under the Transfer Order.”95

Northern RockS/C/W

Nationalisation

“With regard to NR, the bank was nationalised and its former shareholders will only be compensated on the basis of the value of the company without any State support. As a conse-quence, this compensation is likely to be close to zero. This means that the former shareholders have been wiped-out and thus can be considered as having sufficiently supported the consequences of the failure of NR.”96

DunfermlineS/T/W

Remaining at the bad bank

“As regards burden-sharing of the costs related to the impaired assets between the State, shareholders and creditors, the Commission notes that both the former members and the subordinated debt holders will contribute to the restructuring of the bank to the greatest extent possible as they remain with the Rump Dunfermline. Depending on their degree of subordination, they will bear the potential losses from assets held by Rump Dunfermline in accordance with ordinary bankruptcy laws.”97