12.3.3.3 Intermezzo: the different purposes of divestments

The previous subsection illustrated that divestments do not always serve the same purpose. In that regard, it should be recalled that there are three restructuring objectives: i) restoration of long-term viability, ii) burden-sharing/own contribution, and iii) minimising competition distortions. Sometimes, a divestment is aimed specifically at one of the three objectives; and sometimes, a divestment serves several purposes.

The case of Ethias is a prime example of the first situation. Ethias committed to three divestments: i) Ethias Banque, ii) BelRe, and iii) Nateus. With respect to Ethias Banque, the Commission noted firstly that Ethias Banque was historically loss-making, and secondly that the divestment was consistent with the aim of refocussing on Ethias insurance activities.1 This divestment purely served the objective of restoring the viability of Ethias. With respect to BelRe, the Commission noted that, since the estimated market price of BelRe was significantly above its book value, the sale should free additional capital, which could be used to cover restructuring costs.2 With respect to Nateus, this divestment was aimed at increasing competition. The Commission noted that it was a divestment in the core market of Ethias, where the size of Nateus in terms of market share was sufficient to give a new competitor an opportunity to enter the market.3 So in the decision on Ethias, a sharp distinction was made between the divestments in terms of purpose.

By contrast, it is also possible that the same divestment serves three objectives. This can be illustrated by the case of Banco Mare Nostrum (BMN). In the context of the viability-assessment, the decision mentions that BMN would divest the large majority of its equity stakes and subsidiaries.4 In the context of the burden-sharing assessment, the decision mentions that “the restructuring costs are also partly borne by the future proceeds from the divestments of subsidiaries and equity stakes in non-core entities, as set out in the Term Sheet and recalled below in recital (155)”.5 Recital 155 discusses the balance sheet reduction and can be found in the context of the assessment of the compensatory measures.

There are also bank State aid cases in which it is not clear whether the divestments serve the same purpose or several purposes. In these cases, the decisions do not clarify whether the divestments that are needed for viability-purposes are the same divestments that are needed for burden-sharing purposes or that are needed as compensatory measure.

The way in which the divestments are elaborated in the decisions depends to some extent on the purpose of the divestment. Divestments that are needed for viability-purposes have a certain rationale: these divestments concern non- core activities or loss-making activities. Divestments that are meant as an own contribution are not really elaborated in the decisions. In essence, the only important feature of these divestments is that they generate proceeds. So there is no need to discuss other features. By contrast, divestments that are meant as a compensatory measures are discussed in more detail. As will be explained in section 13.5, this is especially true for divestments that are aimed at creating a new competitor.