7.3.1 Intermediary

Sometimes, a Member State does not grant aid to a bank directly, but rather grants the aid through an intermediary, such as a state-owned public company. Are such aid measures imputable to the State?

This question was addressed in several decisions. In these decisions, the Com-mission referred to settled case-law from the Court of Justice. For instance, the Court of Justice has clarified that “imputability to the State of an aid measure taken by a prima facie independent body (for instance, a public undertaking) can be inferred from a set of indicators arising from the circumstances of the case, such as the fact that the body in question cannot take the contested decision without taking into account the requirements of the public authorities, or the fact that, apart from factors of an organic nature which link it to the State, it has to take into account the directives issued by the State before taking the decision allegedly involving State aid”.1 In addition, the Court of Justice has held that the fact that private persons participate in the running of an entity is not sufficient to exclude imputability to the State of the measure at issue.2

In all bank State aid cases involving an intermediary, the Commission came to the conclusion that the aid measures were imputable to the State. For instance, in the case of the Fondo de Reestructuración Ordenada Bancaria (FROB), the intervening authority providing the measures, the Commission considered that the FROB essentially acted as the prolonged arm of the State.3

Sometimes, the imputability-question is more complicated; for instance, when private investors are involved in the intermediary. This was the case in Spain, where an Asset Management Company (AMC) was set up: the Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (SAREB). Ailing Spanish banks could transfer their impaired assets to this AMC. The AMC thus provided asset relief to the beneficiary banks.4 Although private investors had a majority holding in the AMC5, the Commission concluded that the transfer of impaired assets to the AMC involved State resources.6 This con-clusion was based on three reasons. First, the AMC was set up for a public policy objective (i.e. to help troubled Spanish banks by transferring their most risky assets off their balance sheet and thus by helping them implement their restructuring plans). The Commission added that the “genesis in public policy considerations is also underlined by the fact that the AMC was set-up between the Spanish authorities and its international partners as a result of the MoU and the special legal setting implemented by the Spanish authorities for the AMC.”

Second, the FROB was the single largest investor in the AMC and the bonds issued by the AMC were guaranteed by the State. Third, the Spanish public authorities were keeping a high degree of oversight over the AMC’s decisions and overall management issues.7

Under the French refinancing scheme, the Soci é t é de Refinancement des Activit é s des Etablissements de Credit (SRAEC) was set up (later renamed Soci é t é de Financement de l’Economie Française (SFEF)).8 The SRAEC was a refinancing company. It issued securities guaranteed by the French State9 and it used these funds to grant loans to eligible banks in France or to subscribe to shares or debt instruments issued by those banks. The French refinancing scheme was thus an indirect guarantee scheme: instead of directly guaranteeing securities issued by the banks, the French State guaranteed the securities issued by the SRAEC, which in turn subscribed to securities issued by the banks.

According to the French State, the scheme did not classify as State aid, since the scheme was intended to function as a normal market mechanism.10 The SRAEC was not completely State-owned: it was owned for 34% by the French State, while the other 66% of its capital was held by certain banks in France.11 Contrary to the French State, the Commission concluded that the operations of the SRAEC were imputable to the French State.12 Notwithstanding the fact that the SRAEC was not state-owned, it was state-controlled. Several elements led to this conclusion. Firstly, a representative of the French State attended the meetings of the board of administration and he had a right of veto. Secondly, the French State bore the economic risk of the operations of the SRAEC.