You are on page 1of 3

8.8.

98 EN Official Journal of the European Communities C 249/11

STATE AID
CØ42/96 (NNØ194/95)
France

(98/C 249/04)
(Text with EEA relevance)

(Articles 92 to 94 of the Treaty establishing the European Community)

Commission notice pursuant to Article 93(2) of the EC Treaty to other Member States and
interested parties concerning aid which France has decided to grant to Soci~t~ Marseillaise de
Cr~dit

The Commission has sent the French Government the asked to inform the Commission accordingly within
following letter, informing it that it has decided to 15Ùworking days of the date of this letter.
extend the proceedings initiated on 18 September 1996.
As part of the proceedings, the Commission will be
publishing a notice in the Official Journal seeking
‘The Commission has decided to extend the Article 93(2) comments from other Member States and interested
proceedings initiated on 18 September 1996 in respect of parties. In accordance with Protocol 27 of the
the recapitalisation of Soci~t~ Marseillaise de Cr~dit and Agreement on the European Economic Area, it will also
the guarantee ceiling intended to cover any activating of be sending a copy of this letter to the EFTA Surveillance
the guarantee. Details of the decision to extend the Authority, and will publish a notice in the EEA
proceedings and the reasons for it are set out in the supplement to the Official Journal of the European
Annex to this letter. The Commission accordingly gives Communities. It will invite the EFTA Surveillance
the French Government notice to submit its comments, Authority, the EFTA Member States that are signatories
and to supply any information it considers necessary for to the Agreement on the European Economic Area and
an assessment of the case, within one month of the date interested third parties to submit their comments.
of this letter. The Commission would ask the French
Government to inform Soci~t~ Marseillaise de Cr~dit of The Commission draws the French authorities’ attention
the extension of proceedings as soon as possible. to the letter which it sent all Member States on
3ÙNovember 1983 regarding their obligations under
ArticleÙ93(3) of the Treaty and to the notice published
Since this letter is to be published in the Official Journal in the Official Journal of the European Communities
of the European Communities, if the French authorities CØ318, of 24 November 1983, page 3, in which it was
consider any information contained in it to be confi- stated that any aid granted illegally may have to be
dential for reasons of professional secrecy, they are recovered.

ANNEX

1. Introduction

In its notice on the initiation of Article 93(2) proceedings regarding the measures in support of Soci~t~
Marseillaise de Cr~dit (SMC)Ø(Î), the Commission took the view that the measures that might involve
aid within the meaning of Article 92(1) of the EC Treaty were as follows: (i) the capital increases
carried out in 1994 and 1995 amounting to FRF 1Ø241 million; (ii) the capital increase of FRF 858
million planned for 1996. When the proceedings were initiated, it appeared that the compatibility of
these measures with the common market had to be assessed in the light of Article 92(3)(c) of the EC
Treaty.

2. New information submitted and measures notified by the French authorities

The French authorities have informed the Commission that very detailed and exhaustive audits of
SMC’s accounts by independent auditors indicate that the bank will need additional funding. The

(Î)ÙOJ C 49, 19.2.1997.
C 249/12 EN Official Journal of the European Communities 8.8.98

French authorities believe that the only solution that would allow SMC to return to long-term viability
would be if it were associated with a partner that had the necessary know-how for successfully restruc-
turing it.

Following the launch of the sell-off process, the Banque Chaix was the only party prepared to sign the
contract to take over SMC’s shares. The Banque Chaix is a subsidiary of Cr~dit Commercial de France
(CCF), a French private-sector banking group which operates a network of banks in France under the
CCF name, with some 200 agencies and a number of regional banks.

Prior to this privatisation, the French authorities decided to inject some FRF 2Ø900 million by way of a
final recapitalisation of the bank and to grant an additional guarantee of some FRF 400 million.

3. Assessment of the aid content of the measures providing financial support for SMC

For the same reasons as those set out when the Article 93(2) proceedings were initiated, the
Commission concludes that the planned new measures, like the previous ones, constitute aid within the
meaning of Article 92, since, in return for its total financing operation of some FRF 5Ø399 millionØ(Ï),
the State will receive only a symbolic selling price. The Commission will, during the proceedings, check
whether, in the light of the privatisation procedure pursued, the selling price might involve aid to the
buyer.

In addition, there must be an assessment of the aid involved in the State guarantee of some FRF 400
million, aid which, in view of SMC’s financial situation, could be equal to the amount guaranteed.

The Commission will also check whether the terms of the privatisation procedure might involve aid to
SMC.

4. Distortions of trade between Member States

The Comission refers to its notice on the initiation of Article 93(2) proceedings.

5. Examination of the compatibility of the aid

The Commission will examine the new aid and restructuring measures for SMC in accordance with the
criteria set out when the Article 93(2) proceedings were initiated, and will do so in conjunction with the
measures covered by the initiation of proceedings. As far as viability is concerned, the French authorities
have stated that SMC has already undertaken overall restructuring measures. In addition, a recovery
plan drawn up by the purchaser for the period 1997 to 2002 was submitted to the Commission on
26ÙJune 1998, covering essentially the following points:

—Ùthe full refocusing of SMC on local commercial banking activities, with other activities being either
halted and liquidated (risk capital, property development, estate agents) or sold,

—Ùthe redefinition of customer targets and the renewal of working methods in commercial banking,

—Ùthe introduction of new equipment and products so as to modernise the bank’s image and its
performance,

—Ùthe complete reorganisation of the bank by reorganising the agency network and decentralising
commercial responsibilities, centralising administrative tasks and reinforcing central monitoring
functions (particularly credit, bad debts and inspection),

—Ù[.Ø.Ø.] reduction in staff costs [.Ø.Ø.],

—Ù[.Ø.Ø.] reduction in general costs other than staff costs [.Ø.Ø.].

These measures should halt the bank’s decline by the year 2000. The first period of the restructuring
plan (1998 to 2000) anticipates a marked decline in operating results: the planned correction

(Ï)ÙThe FRF 3Ø300 million in maximum aid for 1997 comes on top of the FRF 2Ø099 million for the period 1994 to 1996.
8.8.98 EN Official Journal of the European Communities C 249/13

in assets and the decrease in amounts outstanding should result in a sharp drop in net banking income;
at the same time, the reorganisation and streamlining of the bank are expected to generate substantial
additional costs. The new operating losses are expected to require one or more recapitalisations by the
purchaser. The bank’s return to profitability is expected as from 2002, with a return on equity of 10Ø%,
owing to:

—Ùthe appreciable improvement in the operating ratio owing to the effects of implementing the social
plan and the synergies deriving from cooperation with the purchaser’s group;

—Ùthe return to normal operation as regards risk costs.

6. Conclusions

At this stage, on the basis of the new information provided by the authorities, the Commission considers
that the additional measures injecting some FRF 2Ø900 million by way of recapitalisation into SMC and
the granting of a guarantee of some FRF 400 million constitute new State aid amounting in total to
some FRF 3Ø300 million.

In the light of these factors, the Commission has decided to extend the Article 93(2) proceedings
initiated on 18 September 1996, so as to allow all the parties concerned to submit their comments.

The Commission requests the French authorities to submit their comments to it within one month of the
date of this letter.

The French Government is requested in particular to provide an answer to the following points:

(a)Ùinformation showing that the aid is proportionate to what is strictly necessary from the point of
view of banking regulations;

(b) the operating arrangements and the beneficiary of the some FRF 400 million guarantee notified by
the French authorities on 19 June 1998;

(c) the results of the audits carried out in 1998 prior to the procedure for privatising the bank;

(d) SMC’s social accounts for 1997;

(e) the compensating measures that will offset the distortionary effects of the aid on SMC’s
competitors;

(f) the contract on the sale of SMC signed with the purchaser;

(g) the report drawn up by the Treasury’s advisory bank;

(h) the replies of the institutions contacted as part of the procedure for the privatisation of the bank.

The Commission reserves the right to request further information from the French authorities once it
has analysed the above information.’

The Commission hereby gives other Member States and interested parties notice to submit their comments
on the measures in question within 30 days of the date of publication of this notice, to:

European Commission,
Rue de la Loi/Wetstraat 200,
B-1049 Brussels.

The comments will be communicated to the French Government.