
Article 1 

1. The following measures constitute State aid:
(a) the recapitalisation in the amount of EUR 900 million under the bank support scheme;
(b) the recapitalisation in the amount of EUR 450 million under the bank support scheme;
(c) the guarantees of EUR 1,35 billion under the bank support scheme;
(d) the asset guarantee of EUR 100 million;
(e) the asset guarantee of EUR 200 million;
(f) the recapitalisation in the amount of EUR 500 million;
(g) the State guarantee on subordinated Tier-2 capital instruments with a nominal value of EUR 1 billion;
(h) the contingent capital for the wind-up of HGAA up to a maximum amount of EUR 5,4 billion;
(i) The contingent liquidity support up to a maximum amount of EUR 3,3 billion.
2. The State aid referred to in paragraph 1 is compatible with the internal market, in the light of the commitments set out in the Annex.
Article 2 
Austria shall ensure that the liquidation plan submitted on 29 June 2013 and complemented by submission of 27 August 2013 is implemented in full, including the commitments set out in the Annex.
Article 3 
This Decision is addressed to the Republic of Austria.
Done at Brussels, 3 September 2013.
For the Commission
Joaquín ALMUNIA
Vice-President
ANNEX
The following commitments are provided by Austria exclusively to the European Commission (hereinafter: ‘the Commission’) as sole addressee and only for the purposes of case SA.32554 (ex C 16/2009). Third parties may not rely on these commitments to derive any claims to a certain conduct by Austria and/or the Hypo Alpe Adria group of credit institutions (hereinafter: ‘HGAA’).

The commitments provided to the Commission by Austria in the commitments letter dated 30 November 2012, which are set out in the Annex to the Commission’s approval decision dated 5 December 2012, C(2012) 9255 final, are replaced by the commitments set out under sections B.III.3 and B.III.4.

Save as otherwise provided below, all commitments apply to each of the operational entities listed in section B.II.1 only until the relevant entity has been reprivatised in accordance with section B.IV.3.
 I. 
Austria will ensure that the restructuring plan is fully implemented within the relevant deadlines. Austria undertakes that the implementation of the restructuring plan and the fulfilment of the commitments will be monitored by a Monitoring Trustee. The appointment, duties, obligations and discharge of the Monitoring Trustee must follow the procedures set out in section C.
 II.  1. 
The ‘operational entities’ to be reprivatised in accordance with section B.IV.3 are the following companies (including, in each case, the companies solely controlled by them, either directly or indirectly):
 1.1. 
Hypo Alpe-Adria-Bank AG, Klagenfurt, Austria (‘HBA’).
 1.2. 

— Hypo Alpe-Adria-Bank d.d., Ljubljana, Slovenia (‘HBS’).
— Hypo Leasing d.o.o., Ljubljana, Slovenia (‘HLS’) or its legal successor created under the internal HGAA restructuring, provided that it is put up for sale. This company’s activity is limited to […] and […] leasing.
— Hypo Alpe-Adria-Bank d.d., Zagreb, Croatia (‘HBC’) and its subsidiary Hypo Alpe-Adria-Leasing d.o.o., Croatia (‘HAALC’), whose business activity is limited to […].
— Hypo Alpe-Adria-Bank d.d., Mostar, Bosnia and Herzegovina (‘HBFBiH’).
— Hypo Alpe-Adria-Bank a.d., Banja Luka, Republic of Serbia (‘HBRS’) and its subsidiary Hypo Alpe-Adria-Leasing d.o.o., Banja Luka, Republic of Serbia (‘HLRS’), whose business activity is limited to […] leasing.
— Hypo Alpe-Adria-Bank a.d., Podgorica, Montenegro (‘HBM’).
— Hypo Alpe-Adria-Bank a.d., Belgrade, Serbia (‘HBSE’).
 2. 
In the wind-down part, the non-strategic business lines and portfolios of HGAA and Hypo-Alpe-Adria Bank S.p.A., whose head office is in Udine, Italy (‘HBI’), are to be wound down in accordance with the restructuring plan, while preserving capital and minimising loss of value. All companies/entities not explicitly listed under the preceding section II.1 shall be included in the wind-down part. The wind-down part is to include inter alia:
 2.1. 
Non-strategic shareholdings
 2.2. 

— Portfolio of HBInt. and refinancing lines to subsidiaries (in particular SEE, HBI) remaining in HGAA.
— Sub-portfolios belonging to individual subsidiary banks (HBA, HBI, SEE network banks) and to HLS transferred in the wind down.
— Wind-down leasing companies (HLHU, HLUA, HLBG, HLG, HLC, HLMK, HLA, HLM, HETA, HLI, HRSE and HLSE).
— Minority companies (Credit Management, Norica).
 2.3. 
Hypo Alpe-Adria-Bank S.p.A., Udine, Italy (‘HBI’).
 III.  1. 
Austria will ensure that, while the restructuring plan is being implemented, HGAA pursues a prudent, sound and sustainable business policy, reviews the appropriateness of its internal incentive schemes under statutory and regulatory rules, and makes sure that its incentive schemes do not result in incentivising to undertake unsuitable risks.
 2. 
Austria will ensure that each operational entity (i.e. HBA and the SEE network), until their respective reprivatisation, transfers any annual profit to its respective owners only to the extent that this is allowed by law and does not result in failing to meet the regulatory own capital ratios of the operational entity concerned applicable at the time of the profit transfer, or in any economic disadvantage for the company. This commitment shall also apply mutatis mutandis to any intermediate (holding) companies, HBI until it is completely wound down, and HBInt. as long as it is controlled by Austria.
 3. 
The coupon ban set out in Austria’s commitments letter dated 30 November 2012 and in No 11 in the Annex to the Commission’s approval decision dated 5 December 2012, C(2012) 9255 final, is replaced by the following commitment:
 3.1.  3.1.1. Austria will ensure that HGAA, during the implementation of the restructuring plan, does not make any dividend or coupon payments on its issued Tier 1 and Tier 2 capital instruments (including shares, shareholdings, hybrid capital and additional capital) issued before the final approval decision is adopted, unless HGAA is legally obliged to do so, even without releasing reserves, or with the prior agreement of the Commission services.
 3.1.2. The capital instruments referred to above do not include those capital instruments, shares and/or shareholdings held by Austria, unless a dividend or coupon payment on the capital instruments held by Austria would also result in a payment obligation to third parties.
 3.1.3. The dividend ban under point 3.1.1 does not apply to dividend payments by the temporary ‘minority companies’ that do not engage in advertising, […] and […], (i.e. two SPVs in which external investors hold a 49 % stake; the activity of the SPVs is limited to holding certain securities and paying out income from the securities to HBInt and the minority companies in the form of dividends, see section 5.3.4 of the restructuring plan) where failure to make these payments would result in the winding up of one of these companies, which would have an adverse impact on HGAA’s total capitalisation.
 3.2.  3.2.1. Austria will ensure that HGAA, during the implementation of the restructuring plan, does not call in, repurchase or otherwise terminate before maturity capital instruments within the meaning of point 3.1.1 above, unless HGAA is legally obliged to do so, even without releasing reserves, or with the prior agreement of the Commission services.
 3.2.2. 

— they do not result in a permanent reduction in HGAA’s regulatory capital ratios, and
— payments by HGAA to creditors in connection with the early termination (e.g. repurchase price, indemnity) do not exceed the market value of the instruments at the time of termination, if necessary plus:
— a premium of not more than 10 % of the market value, and/or
— a payment no more than the discounted cash value of the interest due on the instrument until its original maturity date.
 3.2.3. 

— in the case of publicly traded instruments: the average price of the instrument or comparable instruments in the month before publication of the offer to repurchase the instruments in question;
— in the case of other instruments: the value established in another, suitable way and verified by an independent third party using valuations of the instrument or comparable instruments.
 4.  4.1. 
The commitments provided to the Commission by Austria in the commitments letter dated 30 November 2012, which are set out in the Annex to the Commission’s approval decision dated 5 December 2012, C(2012) 9255 final, are replaced by the following commitments.
 4.1.1. HGAA will limit new business in the public finance segment to […] and corporate credit engagements to […] or less, with a 1-year probability of default of […] or less for both public and corporate finance. In addition, all engagements above […] in the corporate segment must be […] % collateralised in compliance with HGAA’s internal credit policy parameters. Exceptions to the above restrictions are permissible if the local regulator requires certain financial instruments to be held. Furthermore, Treasury Bills issued by the Republic of Serbia and the Federation of Bosnia and Herzegovina with a maximum tenor of […] will be exempt from the above restrictions, if the acquisition of these securities […].
 4.1.2. HGAA will disburse new retail mortgages only with a loan-to-value (LTV) ratio of […] % or lower. New retail mortgages with a maximum LTV ratio of […] % is permissible if the debt-to-income ratio of the respective client – defined as total monthly obligations with HGAA and other financial institutions (established through local credit bureaus) divided by monthly net income – is less than or equal to […] %. In addition, any new mortgage granted must be eligible for inclusion in the cover pools under the local legislation on mortgage bonds/securitisation where such legislation exists.
 4.1.3. 

 EURIBOR 3 m + […] % for engagements up to […] years,
 EURIBOR 3 m + […] % for engagements from […] years ([…]),
 EURIBOR 3 m + […] % for engagements above […] years ([…]),

to be increased for countries with a particularly weak credit stance […]. In addition to the group-wide maturity restrictions in public finance and corporate finance (see point 4.1.1), no engagements exceeding […] years may be undertaken in those countries. The funding add-ons may be lowered in cases where assets fulfil the legal and asset criteria for securitisation and are intended to be used directly for securitisation (e.g. mortgages, financial leases, SME loans, and public finance) based on usable collateral as verified by the Monitoring Trustee (between […] and […] bps depending on the amount of collateralisation, […] bps for over-collateralisation).
 4.1.4. After properly calculating the funding cost (in accordance with point 4.1.3) and risk cost (the total expected loss on the uncovered amount, after applying an additional haircut of […] % on the collateral), an annual return on equity of a least […] % for any new credit engagement must be ensured (fees may be taken into account in the calculation). The Commission may, by service letter, lift the requirement for an additional haircut of […] % for the purpose of calculating the risk costs once the Monitoring Trustee provides a reasoned opinion that the bank’s existing collateral valuation system as a whole is appropriate and already includes appropriate haircuts.
 4.1.5. The return on equity within the meaning of the above paragraph must in principle be calculated on the basis of the regulatory capital requirements allocated to the specific loans. However, the methodology currently applied by HGAA for calculating the capital requirements for a specific loan is based on an economic approach, in line with risk-cost calculation. The European Commission may, by service letter, allow HGAA to continue to use the economic approach for the calculation of capital requirements for specific loans upon verification by the monitoring trustee that (i) the methodology is sound, and (ii) provided that HGAA has established that an equivalent return on regulatory capital requirement of […] % would hold both at target portfolio and effective portfolio level.
 4.1.6. 

— […];
— […] are restricted to a nominal volume of EUR […] annual new business; every […] granted in […] must have a credit rating of at least […] or better (in accordance with HGAA’s internal credit rating master scale).
 4.1.7. HGAA will ensure an annual re-rating and complete financial documentary follow-up of each client with an exposure of more than EUR […] equivalent, to be verified by risk management at group head office.
 4.1.8. The Republic of Austria commits to ensuring that the loan-to-deposit (LtD) ratio of the operational entities will be geared towards a successful sale, either by steering the credit process or by other measures to reduce the LtD ratio (artificially or effectively). The Republic of Austria is aware that LtD ratios in excess of 100 % can act as an impediment to the successful sale of an entity.
 4.1.9. HGAA will replace or re-train credit officers and relationship managers where flaws in the credit process have been discovered or where credits have been disbursed at sub-standard profitability levels.
 4.1.10. HGAA shall not acquire any shareholdings in companies or parts of companies (hereinafter: ‘shareholdings’), save as otherwise provided below. With the prior agreement of the Commission, HGAA may acquire shareholdings where special circumstances require it to do so in order to maintain or secure financial stability or effective competition. HAA may acquire shareholdings without the prior agreement of the Commission where: (i) the respective acquisition price is less than […] % of HGAA’s balance-sheet total at the time of the Commission decision, and (ii) the sum of all the acquisition prices paid by HGAA over the whole restructuring period (i.e. until the sale of the SEE network is complete, see IV) is less than […] % of HGAA’s balance-sheet total at the time of the Commission decision. Excluded from the prohibition on acquisitions are shareholdings managed or acquired in the course of HGAA’s normal business operations in connection with non-performing loans or similar banking operations.
 4.1.11. HGAA shall not use the aid for promotion purposes.
 4.1.12. The implementation of the above measures will be monitored on a quarterly basis by an external Monitoring Trustee (see section C below) who reports to the Commission.
 4.2. 
The restrictions set out in 4.1.1-4.1.6 shall apply only to new business as defined below:
 4.2.1. 
The Corporate and Public Finance segments correspond in principle to HGAA’s current business segment definitions, with the following changes:


4.2.1.1. The Corporate segment is defined as:
privately owned companies (with the exception of financial institutions) which meet the following size criteria in terms of turnover and/or exposure:

— Annual turnover of EUR […] or above; or
— Gross exposure of at least EUR […], except in Croatia, with a threshold of EUR […]. HGAA is to provide the Monitoring Trustee with evidence that the current exposure threshold distinguishing the retail segment from the corporate segment in Croatia indeed lies at EUR […] at present and that changing the threshold would entail excessive costs.
4.2.1.2. Public Finance segment:
The Public Finance segment is defined as:

— ‘sovereigns’, i.e. entities that are able to exercise sovereign powers by issuing generally binding laws or other binding regulations (States, ministries, state/government authorities, social security institutions, etc.);
— exposure explicitly guaranteed by sovereigns;
— ‘sub-sovereigns’, i.e. regional and local authorities (federal states, provinces, counties, towns, municipalities) and the political entities of the Republic of Bosnia and Herzegovina, namely the Republic of Serbia and the Federation of Bosnia and Herzegovina; and
— public-sector entities (PSEs, provided that they enjoy a direct sovereign/sub-sovereign guarantee.
Any entity or agency that is not a sovereign/sub-sovereign as defined above and does not have a sovereign/sub-sovereign guarantee must be treated as a corporate (institutional) client in accordance with the rules on the Corporate (institutional) segment.
4.2.1.3. Retail segment:
The Retail segment is defined as:

— private individuals
— all forms of SME, i.e. privately held companies, freelancers and agricultural entities, regardless of their legal form, which meet all the following size criteria in terms of turnover and exposure:
— annual turnover of less than EUR […], and
— gross exposure of less than EUR […], except Croatia with a threshold of EUR […] (subject to the provision of evidence as stipulated in the second indent under 4.2.1.1 above).
 4.2.2.  4.2.2.1. 
In principle ‘new business’ within the meaning of the restrictions on new business under points 4.1.1 to 4.1.6 is defined according to HGAA’s existing risk reporting standards and therefore encompasses either:


— risk-relevant credit/leasing transactions with a completely new client (or with a group of connected clients — GoB) - i.e. ‘new client business’ (NCB); or
— increases in credit/leasing exposure with existing clients (on a product basis) - i.e. ‘exposure-increasing business’ (ExIB); and
— credit/leasing exposure renewals (prolongations) with existing clients (on a product basis) going beyond a tenor of […] – i.e. ‘exposure-prolonging business’ - (ExPB).
 4.2.2.2. 

— Within the context of ExIB, new business must be considered at the level of individual transactions. So if a client intends to increase its cash exposure and in turn reduce its guarantee exposure by the same amount, the increased cash exposure still counts as new business.
— Finance leasing must be treated as credit financing. New business (NCB and ExIB) must therefore be fully compliant with the new business requirements under points 4.1.1 to 4.16 above.
— Operating leasing must be treated as new business within the meaning of points 4.1.1-4.1.6, having regard to the following considerations:
— Minimum rating of […] and maximum tenor as per the restrictions on new business must be observed.
— Full collateralisation is to be assumed as long as the residual value is fully covered by the carrying value, provided that the residual value is sufficiently conservative; this will be the case where the residual value corresponds to a highly probable sales value (after deduction of sales costs) of the underlying item in the financial records of the booking entity.
— Any credit engagement involving uncommitted credit lines should adhere to the new lending standards under points 4.1.1-4.1.6.
— Intragroup transactions (e.g. refinancing of local banks, leasing and other participations) and business arising out of HGAA’s liquidity management requirements shall be accounted for in the Financial Institutions segment.
 4.2.2.3. 
The following risk-relevant transactions are not subject to the restrictions on new business under points 4.1.1-4.1.6:


— Transactions with financial institutions in the context of HGAA’s liquidity book, i.e.

— FX spot transactions (i.e. intra-day settlement limits);
— FX outrights und swaps with a maximum tenor of […], provided that a netting and collateral agreement (ISDA and CSA), stipulating a threshold (substantive unsecured exposure) of maximum EUR […], is in place;
— Money-market loans, deposits and (reverse) repo transactions, each with a maximum tenor of […], where the maximum amount per counterparty is limited to a total of EUR […] and the total amount granted at any time is limited to a maximum of EUR […].
— Financial derivatives (interest-rate swaps) with a maximum tenor of […], provided that a netting and collateral agreement (ISDA and CSA), stipulating a threshold (substantive unsecured exposure) of maximum EUR […], is in place.HGAA must ensure that individual counterparty limits for financial institutions business are approved by the group head office risk management, with a maximum tenor of […].
— New financing and prolongations, roll-overs, restructurings and reprogrammings granted to non-performing clients (and all customers within the remit of Group/Local Task Force Rehabilitation and/or Credit Rehabilitation) with the aim and the clearly documented prospect of bringing them back to performing status and/or enabling a final recovery of the exposure, as long as the maturity of the new financing in this context is limited to […]. Any such transaction should be adequately documented, including quantitative evidence that it is the best way of preserving value for HGAA rather than merely a delay in the recognition of losses. The assumptions used for this quantitative assessment should be sufficiently conservative.
— Prolongations, roll-overs, restructurings or reprogrammings of existing performing exposures or existing performing clients (GoBs), which are objectively justified, in the interest of HGAA, and not granted a tenor of more than […]. Any such transaction should be adequately documented, including quantitative evidence that it is the best way of preserving value for HGAA rather than merely a delay in the recognition of losses. The assumptions used for this quantitative assessment should be sufficiently conservative.
— Additional financings provided to clients on the group/local watch-list with the aim and the clear, documented prospect of stabilising their financial situation (including hedging of interest-rate and FX risks), thus preventing an event of default and enabling them to return to performing status as long as this kind of financing is not granted beyond a tenor of […]. Any such transaction must be adequately documented, including quantitative evidence that it is the best way of preserving value for HGAA rather than merely a delay in the recognition of losses. The assumptions used for this quantitative assessment should be sufficiently conservative.
— Transactions
— which are fully covered in cash, fully enforceable for collateral purposes for the entire duration of the loan contract, unencumbered by pledges in existing credits, provided the client’s rating is not worse than […], OR
— which are fully covered by a guarantee from a financial institution (bank guarantee), provided the guarantor’s rating is no worse than […].
— Exposure increases due to fluctuations in FX rates, market values of derivatives and pricing of bonds.
— Conversion of existing FX loans to EUR loans, if the client’s accounting currency is EUR, Kuna or Convertible Mark, the total exposure is converted at the prevailing FX-rate, and the collateral terms for HGAA are the same or better.
— Business for which an offer (term sheet) mutually agreed by the responsible local risk and sale unit was sent to and accepted by HGAA clients before 1 January 2013, provided that HGAA is legally bound to disburse and this can be properly documented.
— Business conducted using funds from development banks and supranational financing institutions (e.g. EIB, EBRD, HBOR, SID, etc.) as well as subsidised loan programmes offered by sovereign/sub-sovereign agencies, provided that, as far as collateralisation is concerned, the cut-off rating […] and a maximum tenor of […] must be observed. Such subsidised loan programmes must have credit-risk mitigating features […], which is to be confirmed by the Monitoring Trustee prior to HGAA’s participation.
— Internal financings (i.e. refinancing lines) provided to other HGAA entities for repossession of collaterals and assets in the process of court auctions or sales.
— Reclassification of leases, i.e. from operating leases to financial leases, if the asset risk of the operating lease can be fully converted into counterparty risk (in other words, all of the risks and rewards incidental to ownership of the leased asset are transferred from the lessor to the lessee.
— Fulfilment of existing contracts and commitments (e.g. real estate under construction, activation of leases to go), provided the contract or local legislation does not allow for the possibility of cancelling the commitment in part or in whole, for example under one of the covenant clauses.
 4.2.3. 
In accordance with point 4.2.2.1 and in compliance with the principles of due and prudent risk reporting, ‘new business’ for the retail segment is defined as follows:


((i)) A risk-relevant credit or leasing transaction (e.g. a loan or a credit line) which is considered a retail lending or leasing product and which is newly granted to an existing or new customer (or GoB), OR
((ii)) For limit-based retail products already held by a retail client, such as overdrafts, credit cards and retail SME (working capital) credit lines, the difference between the newly granted (higher) limit and the old (lower) limit, OR
((iii)) For amortising retail products already held by a client, such as all forms of instalment loans, the difference between the newly/granted (higher) loan amount and the old (lower) loan amount.
 4.2.3.1. 

((i)) Until HGAA is in a position to report on incremental exposure increases as outlined in 4.2.3(ii) and (iii), exposure increases with existing clients (on a product basis) are considered new business. For clarification: a decrease in the instalment frequency (e.g. from monthly to quarterly) is considered new business.
((ii)) Marginal/insignificant exposure increases (up to EUR […]) caused by transaction fees, capitalised interest/fees, etc., in particular relating to the transactions listed under 4.2.3.2 (e.g. currency switches, restructurings, consolidations, prolongations, etc.) are not considered new business at any time.
((iii)) Within the context of exposure-increasing retail business, the existence or otherwise of new business must be determined at the level of individual transactions, so exposure increases on one product (held by the client) are not to be netted against exposure decreases on another product. Netting of client loans against client deposits is not permissible either.
((iv)) Finance leasing shall be treated as credit financing, and is therefore new business pursuant to 4.2.3, and subject to the restrictions on new business.
((v)) Operating leasing shall be treated as new business if it is caught by 4.2.3, and is therefore subject to the restrictions on new business.
((vi)) Reclassification of leases (e.g. from operating leases to finance leases) is not considered new business, unless it increases the risk exposure of the bank in regulatory or economic terms.
 4.2.3.2. 
The following risk-relevant transactions are to receive specific treatment:


— All offers on retail loans made to clients before 1 January 2013are not subject to the restrictions on new business, provided that they are accepted by the client within the acceptance period as determined by the laws in the relevant country. Offers made after 1 January 2013 must comply with the commitments under point 4.1.
— Retail loans made using funds from development banks and supranational financing institutions (e.g. EIB, EBRD, HBOR, SID, etc.) and subsidised loan programmes supported by sovereign/sub-sovereign lending or insurance agencies or public funds are not subject to the restrictions on new business.
— Restructuring of retail loan or lease contracts, if they were provided to natural persons (private clients) with a maximum amount of EUR […], are not considered new business, as long as the exposure is not increased. The following principles must be observed:

— Restructuring should always be net-present-value neutral (NPV-neutral);
— In the course of a restructuring, exposure to a client may NOT be increased;
— No new money may be disbursed to the customer during the restructuring process or under the restructured obligation;
— Restructuring of a retail client may take place only if the client demonstrates the ability and willingness to repay the restructured obligation;
— Clients being sued (by a third party), subject to legal enforcement measures, or otherwise having limited legal capacity because of a statutory procedure may not be restructured.If the client is not a natural person (private client) but an SME (business client) and hence not subject to the above eligibility criterion, the restructuring rules (recovery maximisation) and maturity limitations for corporate clients will apply.
— Cross-segment migration of existing exposure without any exposure increase is not considered new business. This in particular affects exposure on project financing (e.g. construction of apartments) made by the corporate segment, which is ultimately covered/paid back by retail clients, for example when they take up loans for the purchase of the apartments. In this case, the exposure has effectively migrated from the corporate segment to the retail segment. However, the following limitations apply:
— The maximum permissible LTV is […] %, and
— The maximum annual volume of new business is limited to […] % of the annual volume of new retail mortgage business within each country.
— Increases in the total exposure of retail loans due to interest, fees or other forms of debt capitalisation (mostly in the context of non-performing loans or restructurings) are not considered to be new business.
— Debt consolidation for retail clients (within HGAA booking entities or groups of accounts) is considered to be part of restructuring if the related exposure is limited to EUR […] (EUR […] in Croatia, if accepted by the Monitoring Trustee, see 4.2.1.3). If the exposure is larger, the maturity limitations for corporate clients will apply.
However, if the new consolidated loan is granted in the form of a retail loan, and the exposure is (substantially) higher than the sum of exposures of the consolidated loans, the difference in exposure is deemed to be new business, in accordance with 4.2.3(ii) and (iii). Until the reporting capabilities are in place, however, 4.2.3.1(i) applies.
— ‘Loan top-ups’ on retail loans are not to be considered new business, if the option to top up was explicitly granted in the original loan agreement, could not be cancelled by HGAA and was subject only to the client meeting certain loan covenants, although without the client having to go through a standard loan appraisal. In the case of other forms of top-ups on retail loans, the difference between the old loan amount and the new loan amount is considered to be new business in accordance with 4.2.3(ii) and (iii). Until the reporting capabilities are in place, however, 4.2.3.1(i) applies.
— ‘Currency switches’, i.e. a retail client switching from a foreign-currency denominated loan (or foreign-currency indexed loan) to a local-currency denominated loan, without a substantial increase in exposure (up to EUR […]), are not considered new business. In the event of a substantial increase in exposure, the difference between the old loan amount and the new loan amount is considered new business in accordance with 4.2.3(ii) and (iii). Until the reporting capabilities are in place, however, 4.2.3.1(i) applies.
— Retail loans granted for the re-marketing or re-leasing of repossessed assets/collaterals are not considered new business, although the following limitations apply:
— For the re-marketing of apartments and other real estate, the maximum permissible LTV is […] % and the maximum annual volume of new business is limited to […] % of the annual volume of new retail mortgage business within each country.
— For vehicles and equipment, the maximum annual volume of new business is limited to […] % of the annual volume of new retail vehicle and equipment business within each country.
— Fulfilment of existing contracts and commitments (e.g. real estate under construction, activation of leases to go) is not considered to be new business.
 IV.  1.  1.1. On 31 December 2008 HGAA was active as an international financial group with 384 branches in twelve countries (Austria, Italy, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Bulgaria, Germany, the Former Yugoslav Republic of Macedonia, Ukraine, Hungary) in banking (retail, corporate, public), leasing (retail, corporate, real estate, motor vehicles, equipment) and shareholdings with a balance-sheet total of EUR 43,34 billion and risk-weighted assets (RWA) of EUR 32,83 billion.
 1.2. Soon after HGAA was nationalised, it withdrew from all new business in Bulgaria, the Former Yugoslav Republic of Macedonia, Ukraine, Hungary and Germany and ceased all non-strategic activities. The subsidiaries in these countries were put into wind-down and are now being resolved in an orderly fashion. The strategic new positioning has resulted in the closure of twelve of the former total of eighteen branches in the ‘wind-down countries’ of Bulgaria, the Former Yugoslav Republic of Macedonia, Ukraine, Hungary and Germany.
 1.3. 

— HBA had a balance-sheet total on 31 December 2012 of some EUR 4,15 billion, representing approximately 59 % of its balance-sheet total on 31 December 2008 (EUR 7,05 billion) and only 10 % of HGAA’s group balance-sheet total on 31 December 2008 and RWA of EUR 1,23 billion (HBA on 31 December 2008: EUR 3,392 billion);
— HBI had a balance-sheet total on 31 December 2012 of EUR 3,28 billion, corresponding to approximately 65 % of its balance-sheet total on 31 December 2008 (EUR 5,02 billion) and only 8 % of HGAA’s group balance-sheet total on 31 December 2008, and RWA of EUR 2,54 billion (HBI on 31 December 2008: EUR 4,198 billion);
— the SEE network had a balance-sheet total on 31 December 2012 of EUR 10,11 billion, corresponding to 68,5 % of its balance-sheet total on 31 December 2008 (EUR 14,775 billion) and only 23 % of HGAA’s group balance-sheet total on 31 December 2008, and RWA of EUR 7,2 billion (SEE at 31 December 2008: EUR 12,623 billion);

The classification of HBI as a wind-down entity in the second half of 2013 reduces the combined balance-sheet total of the operational entities (HBA and SEE network) by a further 19 % compared with the existing data, corresponding to only approximately 33 % of HGAA’s group balance-sheet total and 26 % of RWA on 31 December 2008.
 1.4. The remaining operational entities are to be privatised as quickly and efficiently as possible in accordance with section B.IV.3. After the operational entities have been completely privatised, HGAA’s balance sheet will still contain business to be wound down.
 2. 
Austria commits that HGAA will conduct the business of the operational entities with the objective of restoring and maintaining their long-term profitability in accordance with the provisions of the restructuring plan and its annexes (including this list of commitments). This commitment does not stand in the way of the restructuring of the operational entities and/or the transfer of individual assets or portfolios to the wind-down part, provided this is necessary to restore, maintain or optimise the prospects of reprivatisation.
 3. 
Austria undertakes that the operational entities will be reprivatised at the earliest possible opportunity in accordance with this section. References in this section B.IV.3. to the reprivatisation of the operational entities include the authorised reprivatisation of parts of the operational entities, if necessary.
 3.1. 
The reprivatisation of an operational entity is deemed to have taken place if the Republic of Austria has sold 100 % of the shares or all the assets of the operational entity concerned to one or more purchasers not controlled by the Republic of Austria. Reprivatisation also includes the sale of all the shares held directly or indirectly by Austria in the operational entities as part of an IPO under normal market conditions.
 3.2. 
Reprivatisation is deemed to have taken place on the day on which a binding purchase contract for the acquisition of the operational entity governed by the law of obligations (‘purchase contract’) is signed. Where parts of an operational entity are sold to several purchasers, the effective date of privatisation is the day on which the last purchase contract is concluded. In the event of an IPO, the effective date of a timely privatisation is the day on which the last share held directly or indirectly by Austria is placed on the market. However, the entities sold through an IPO are no longer bound by the commitments in section B.III with effect from the day on which […] shares are placed on the market.
 3.3. 
HBA must be reprivatised by 31 December 2013 and the SEE network by 30 June 2015.
 3.4. 
The sale of HBA must take place by […]. Execution of contracts for the sale of the SEE network must take place by […].
 3.5. 
In the event of delays due to the absence of the necessary sale authorisations by a supervisory or competition authority, the Commission may agree to extend an execution deadline for the sale of the SEE network in accordance with 3.4 by a further […]. Austria will submit an application in good time, in any event at least two weeks before the original execution deadline expires, and provide the Commission with confirmation from the Monitoring Trustee that the delay is due entirely to the authorising authority(ies) and confirmation that HGAA has taken all reasonable steps in order to bring about execution of the sale contract within the original deadline.
 3.6. 
If it transpires, after the timely reprivatisation but before the execution deadline has expired, that the purchaser of an entity is unable to fulfil the execution conditions or cannot fulfil them by the execution deadline, the sale may take place to a third party with the Commission’s agreement, provided that sale can be executed within the execution deadline for the first sale.
 3.7. 
If a reprivatisation deadline under 3.3 or an execution deadline under 3.4 read in conjunction with 3.5 is not met, the entity concerned must cease new business from the day following the day on which the deadline expires. From that date, the provisions of this list of commitments that apply to the wind-down part shall apply to the entity concerned.
 4.  4.1. Austria undertakes that HGAA will initiate the sale procedures needed to re-privatise the operational entities in a timely fashion and conduct them quickly in order to allow the earliest possible reprivatisation.
 4.2. Reprivatisation of the operational entities will take place either as part of an IPO under normal market conditions or, where allowed by law and possible without infringing commercial secrets, as part of an open, transparent and unconditional sale procedure involving the usual representations and warranties. This does not preclude the holding of negotiations with specifically identified interested parties before or during such a procedure.
 V.  1.  1.1. Austria commits that HGAA, with effect from the date of adoption of the final approval, will wind down exclusively the business in its wind-down part on that date in a way that preserves capital and value.
 1.2. The assets in the wind-down part will be actively and effectively sold, liquidated or wound down.
 1.3. In principle the assets must be sold as quickly as possible. HGAA undertakes to sell these assets as soon as it is possible to achieve at least the asset book value as sale proceeds, unless the sale price is considered clearly inappropriate on the basis of an incontestable, objective valuation.
 1.4. All assets that cannot be sold under 1.3 will expire at term.
 2.  2.1. Austria commits that, with effect from the date of adoption of the final approval, no new business will be concluded in the wind-down part. Save as otherwise provided for below under 2.2 und 2.3, from that date all HGAA companies, with the exception of the operational entities, will wind down only their existing business on that date.
 2.2. 
The following continue to be admissible:


— transactions which are necessary in the context of liquidity management in the wind-down part, i.e. central bank transactions;
— management of the cover pools in the wind-down part, where no new asset business is transacted, save as provided by the rule in indent 4;
— derivative transactions which are necessary in order to manage interest-rate, currency and credit risks in the existing portfolio, e.g. asset swaps, provided that they reduce HGAA’s overall market risk position;
— transactions that are necessary for regulatory or other legal reasons, including the acquisition, holding and sale of securities authorised for the management of HGAA’s cover pools and liquidity;
— business concluded by the wind-down entity for its own refinancing, including new issues and buying back of debt;
— the purchase of moveable and immovable assets in the context of court-supervised and extra-judicial auctions and private transfer to take possession of securities;
— fulfilment of existing contracts and commitments (e.g. real estate under construction, activation of leases to go, reclassification of finance leases as operating leases and vice versa);
— re-leasing of assets (short to medium-term), where it is not possible to sell the assets in the short term and preserve value, in order to reduce or avoid costs (maintenance, etc.).

In addition, transactions with HGAA group companies remain authorised (provided that their purpose is the prolongation of refinancing lines) and transactions with buyers of HGAA assets (shareholdings, portfolios, etc.), which are carried out in connection with the reprivatisation and are necessary for the successful sale of the entities/assets concerned (e.g. seller financing, extension by HGAA of collateral granted — such as guarantees — in favour of the buyer, etc.).
 2.3. In the case of engagements whose performance is affected, the wind-down entity may, as part of the recovery and resolution, make adjustments to the transaction with the respective debtor of the reference commitment concerned, provided that these measures can be regarded as preserving value or reducing risk without causing distortions of competition, which must be substantiated in writing to the Monitoring Trustee in every case. Adjustments to the transaction are changes to the engagement, for example interest-rate adjustments, deferrals, rescheduling of maturity, assumption of an obligation, prolongations and debt conversion, e.g. through the conclusion of new credit agreements for the same amount, changes to collateral or changes to financial ratios or waiving the legal effects of financial ratios. The adjustments referred to in this paragraph may have a maturity extension of […]; adjustments exceeding this may be undertaken only with the approval of the Monitoring Trustee.
 2.4. Furthermore, (financing of) expenditure on direct enhancements of assets to be sold is authorised, if by so doing it is possible to significantly increase the chances of marketing. This concerns in particular legal fees and administrative charges (e.g. for corrections to the local land register) and, in individual cases, structural/technical changes to individual assets, for which agreement by the Monitoring Trustee is required.
 3. 
In order to prevent market distortion during the resolution of Retail-Bank HBI and deposit outflows, and to cushion against HBI’s resulting additional liquidity requirements, the following provisions will apply to HBI:


3.1. HBI will not transact any new business, save as otherwise provided below.
3.2. HBI’s assets will be gradually reduced through sales of portfolios or individual assets, further restructuring transactions (i.e. transfers of portfolios and/or assets to the wind-down entity) and also by the amortisation of existing assets.
3.3. The wind-down of the liabilities on HBI’s balance sheet will follow the wind-down of the assets on its balance sheet and will be determined by the latter. HBI’s liabilities will therefore be reduced proportionally to the reduction on the asset side.
3.4. At present, the following key steps are planned for the wind-down of HBI:

— reduction in the current balance-sheet total of approximately EUR 3 billion by around […] % by the end of 2013 through further portfolio transfers to the local wind-down entity (HLI);
— reduction in the balance-sheet total of the remaining amounts receivable by contractual maturity of around EUR […] to some EUR […] by the end of 2018;
— […]

[…] […] […] […] […] […] […]
[…] […] […] […] […] […] […]
[…] […] […] […] […] […] […]
3.5. In order to secure […] own refinancing by HBI in the wind-down stage and avoid the need for additional liquidity, HBI may […], provided this is necessary in order to prevent or offset an undershoot of the existing […].
3.6. HBI will offer/take deposits only at nominal interest rates below the average of the best reference rates offered in the same period by HBI’s five leading unassisted competitors […] for comparable products.
3.7. […].
3.8. Save as otherwise provided above, the provisions concerning the wind-down part in V.1 and V.2 shall apply mutatis mutandis to the wind-down of HBI.

2.  I.  1. Austria will ensure that HGAA appoints, in accordance with the following provisions, a Monitoring Trustee (hereinafter: ‘Trustee’) who must carry out the tasks and duties referred to in section C.II.
 2. The Trustee must be independent of HGAA, at no time become exposed to a conflict of interest, and possess the specialist knowledge required to carry out his mandate. The Trustee is to be remunerated by HGAA in a way that does not impede the independent and effective fulfilment of his mandate. The cost of the Trustee will, as far as is legally permissible, be borne by HGAA, otherwise it will be borne by Austria.
 3. 

3.1. Austria undertakes that HGAA will submit the names of one or more persons as Trustee within an appropriate time frame. The proposals must contain sufficient information about those persons with regard to their suitability (section C.I.2). The appointment of a proposed Trustee by HGAA is subject to the approval of the Commission, which may withhold its approval only if the proposed Trustee is manifestly unsuitable.
3.2. If the Commission rejects all the trustees proposed by HGAA, Austria undertakes to ensure that HGAA submits the names of one or more further persons within four weeks of being informed of the rejection, in accordance with the requirements and procedure set out in sections C.I.2 und C.I.3. If all further proposed trustees are also rejected by the Commission, the Commission will nominate a trustee whom HGAA will then appoint.
 II.  1. The duty of the Trustee is to monitor the full and timely implementation of HGAA’s restructuring plan and compliance with the commitments, and to perform the Trustee’s specific duties set out in the list of commitments (for example in section D.I). The Commission may request explanations or clarifications from the Trustee.
 2. The Trustee will report quarterly to the Commission on the implementation of the restructuring plan and compliance with the commitments. To this end, the Trustee will submit a draft written report on the implementation of the restructuring plan and compliance with the commitments to the Commission, Austria and HGAA after the end of each quarter. If necessary, the Commission may specify the scope of the report in more detail.
 3. The Commission, Austria and HGAA may submit comments on the draft within two weeks of receiving it (‘deadline for comments’). Within four weeks of the deadline for comments, the Trustee will submit the final report to the Commission, incorporating any comments. The Trustee is also to send a copy of the final report to Austria and HGAA.
 III. 
Austria will ensure that, during the implementation of the final approval, the Commission and the Trustee are to have unrestricted access to all information required to monitor the implementation of the final approval. HGAA will support the Trustee by preparing and making information available quickly. The Commission and the Trustee may ask HGAA and Austria for explanations and clarification. Austria and HGAA will cooperate fully with the Commission and the Trustee with regard to monitoring of the implementation of the final approval.
 IV.  1. If the Trustee does not fulfil his duties and obligations or does not (any longer) fulfil the suitability criteria (section C.I.2.), the Trustee may be removed by HGAA with the agreement of the Commission or, in the event of a corresponding justified request by the Commission, after hearing the Trustee, the Trustee must be removed by HGAA. If the Trustee is removed, he must be replaced by a new Trustee. The new Trustee is to be appointed in accordance with the procedure referred to in section C.I..
 2. If the Trustee is removed, he may be required to continue in his function until a new Trustee is in place. The removed Trustee must hand over all relevant information to the new Trustee. The activity of the removed Trustee will end only once he has been discharged from his duties by HGAA with the agreement of the Commission.

2.  I.  1. The Republic of Austria undertakes not to grant further aid to companies in the HGAA Group that are not included in the wind-down part unless the aid serves regulatory requirements and this is confirmed by the regulator. The Republic of Austria further undertakes to notify the Commission immediately of all further aid measures in favour of HGAA until the restructuring plan has been fully implemented.
 II.  1. In the event of a conflict between Austria’s commitments and HGAA’s legal obligations, Austria undertakes that HGAA will notify the Trustee without delay and propose an alternative to resolve the conflict.
 2. After receiving a sufficiently documented alternative proposal from HGAA, the Trustee will examine as rapidly as possible, in consultation with the Commission, whether the alternative proposal is appropriate, having regard to the final approval and the specific HGAA legal obligation in question. If the proposal is suitable, the Commission services will take the further necessary steps in accordance with the relevant procedures.
 III. 
In response to a sufficiently documented application by Austria, the Commission may, in consultation with the Trustee, grant an extension to the deadlines laid down in the commitments, provided that a certain result is promised within that deadline, or lift, change or replace one of more of the duties and conditions in these commitments.
