
Article 1 
The Commission Decision of 25 July 2012 on State aid granted by Germany and Austria to Bayerische Landesbank (Case SA.28487 (C 16/09, ex N 254/09)) is repealed.
Article 2 

1. The following measures constitute State aid within the meaning of Article 107(1) TFEU:
(a) the recapitalisation of Bayerische Landesbank by the Land of Bavaria, in the amount of EUR 10 billion;
(b) the second-loss guarantee in the form of a risk shield granted to Bayerische Landesbank by the Land of Bavaria, in the amount of EUR 4,8 billion;
(c) the liability guarantees granted to Bayerische Landesbank by Germany, in the amount of EUR 15 billion;
(d) the funding guarantee granted to Bayerische Landesbank by Austria, in the amount of EUR 2,638 billion; and
(e) the transfer of EUR 1 billion in capital in Bayerische Landesbodenkreditanstalt from the Land of Bavaria to Bayerische Landesbank.
2. The State aid referred to in paragraph 1 is compatible with the internal market, in the light of the commitments set out in Annex I and Annex III and subject to the conditions set out in Annex II.
Article 3 
Germany shall ensure that the restructuring plan submitted on 6 June 2012 and supplemented on 12 June 2012 is implemented in full, including the commitments set out in Annexes I and III and the conditions set out in Annex II, in accordance with the schedule set out in those Annexes.
Article 4 
Germany shall inform the Commission within 2 months of notification of this Decision of the measures taken to comply with it.
Article 5 
This Decision is addressed to the Federal Republic of Germany and to the Republic of Austria.
Done at Brussels, 5 February 2013.
For the Commission
Joaquín ALMUNIA
Vice-President
ANNEX I
A.  1. [Restructuring phase] The restructuring phase will end on 31 December 2015. The following commitments apply during the restructuring phase unless the individual commitment states otherwise. Where a repayment under points 2 and 3 of Annex II is made only after that date, points 4, 6-8, 18-22, 24, 25, 27 and 28 of this Annex I will continue to apply until the bank has fulfilled all its payment obligations, but in no case beyond 31 December 2018.
 2. [Trustee] The full and proper implementation of all the commitments and conditions set out in this list will be continuously and thoroughly monitored and checked in detail by a suitably qualified monitoring trustee that is independent of BayernLB. The arrangements concerning the appointment and duties of the monitoring trustee will be set out in a separate agreement.
 3. [Core bank and restructuring unit] BayernLB has set up an internal restructuring unit to handle the reduction of certain portfolios on its own responsibility and also to monitor the other reduction measures taken by business areas and subsidiaries across the entire group. In functional and organisational terms, the internal restructuring unit is separate from the ongoing business areas of the core bank and subsidiaries (together, ‘the core business’) and is accounted for as a separate segment.

B.  4. [Reduction of balance sheet total—group] BayernLB undertakes to reduce its balance sheet assets to around EUR 239,4 billion by 31 December 2015 by closing locations abroad, selling holdings and restricting its business activities. To ensure that monitoring can proceed smoothly, any change in the EUR/USD exchange rate will be disregarded as long as the rate does not fall below the following: [1,05-1,25] for 2012, [1,05-1,25] for 2013, [1,05-1,25] for 2014, and [1,05-1,25] for 2015. If the EUR/USD rate falls below these levels the bank may, after informing the monitoring trustee, adjust the target balance sheet total taking account of the exchange rate drop by the full difference compared with the planned rate, provided that the Commission does not object to the adjustment in writing, giving adequate reasons for the objection.
 5. [Reduction of balance sheet total—restructuring unit] The total balance sheet assets of the restructuring unit will be reduced to around EUR [7,5-10] billion by 31 December 2015. Subject to point 4, which will apply mutatis mutandis, any overrun with respect to this sum will be disregarded in so far as it is due to a decrease in the EUR/USD exchange rate below the rate referred to in the second sentence of point 4.
 6. 

((a)) [Project finance] BayernLB will ensure that, from [the date from which this commitment is to be acted upon, i.e. 25 September 2012], the RWAs of project financing activities in the core business, i.e. financing for special-purpose vehicles where credit is actually geared to the cashflow-based performance of the special-purpose vehicle or investment, do not exceed a ceiling of EUR [3-4] billion, in accordance with the modified restructuring plan.
((b)) [International real estate] BayernLB will ensure that, as from [the date from which this commitment is to be acted upon, i.e. 25 September 2012], the RWAs of international real estate business in the foreign locations in its core business (business with international real estate customers, i.e. financing with a link to Germany as defined in points 6(i) and (iv) in the context of the structuring on normal market terms of commercial real estate transactions including special-purpose vehicles), do not exceed a ceiling of EUR [0,5-1] billion, in accordance with the modified restructuring plan.
((c)) [Corporate banking] BayernLB will ensure that, as from [the date from which this commitment is to be acted upon, i.e. 25 September 2012], the RWAs in the area of corporate banking (financing of large corporates) in its core business do not exceed a ceiling of EUR [9-12] billion, in accordance with the modified restructuring plan.

BayernLB will not conduct any business from the business areas referred to in (a), (b) and (c) in other business areas in order to circumvent the specified risk assets ceilings. In the event of any doubt, the classification of activities under the business areas referred to above and the planning data will follow the restructuring plan.
 7. 

((a)) A change in the EUR/USD exchange rate compared with the plan outlined in point 4 will be disregarded as long as the rate does not fall below the following: [1,05-1,25] for 2012, [1,05-1,25] for 2013, [1,05-1,25] for 2014 and [1,05-1,25] for 2015. If the EUR/USD exchange rate falls below these levels the bank may, after informing the monitoring trustee, adjust the RWA ceilings taking account of the exchange rate drop by the full amount of the difference compared with the RWA ceilings set out in point 6(a) to (c). The Commission may object to the adjustment in writing, giving adequate reasons for the objection.
((b)) An increase in the RWAs due to a change in the regulatory requirements concerning the calculation of RWAs or a change in national or international accounting rules compared with the present situation will be disregarded, provided the Commission, after being consulted, does not object.
 8. 

((a)) Asset-backed securities
No investments will be made in tranched asset-backed securities or tranched loans that involve an underlying pool of obligations or that have a structure that leverages risk. Securitisation of financing operations by the bank itself in its own interest for the purposes of refinancing and/or balance sheet management and the purchase/financing of non-tranched receivables portfolios of core customers via transaction-related securitisation platforms continue to be admissible.
((b)) Transaction-related secured lending/acquisition finance without a link to Germany
The bank will no longer be involved in transaction-related secured lending or acquisition finance with no link to Germany, i.e. the debt-financed acquisition of undertakings involving a large proportion of borrowed funds to cover the purchase price that are secured solely or mainly against the target business and its assets.
((c)) Ship and aircraft financing
The bank will no longer offer asset-based financing for ships and aircraft, i.e. financing for the acquisition of these assets where the ship or aircraft acquired constitutes the main collateral. Aircraft financing is exempted from this discontinuance if it is 100 % covered by ECAs and the credit is geared solely to the export credit insurance and not to the underlying asset itself (pure export finance).
((d)) Core bank business with public authorities outside Bavaria
BayernLB will cease new credit business with towns, municipalities and associations of municipalities outside Bavaria. This does not include liquidity management measures. Financing for public-private partnerships, project and export financing in the interest of customers with a link to Germany where a public authority is the customer (offtaker) continue to be admissible.

C.  9. 

Location Date
Beijing 2009
Tokyo 2009
Montreal 2009
Mumbai 2009
Kiev 2010
Hong Kong 2010
Shanghai 2010
 10. Existing business that was not wound up by the date of closure of the locations listed in point 9 has been transferred or has been running down since that time upon the maturity of the underlying business. No new business will be accepted.
 11. 

Name Place Shareholding (%) Balance sheet/RWA Target date
Banque LB Lux SA Luxembourg 100 6 441,3/[…] […]
DKB Immobilien AG Berlin 100  2012
KGE Kommunalgrund Munich 100  […]
Stadtwerke Cottbus GmbH Cottbus 74,9  […]
[…] […] […]  […]
GBW AG Munich 91,93  […]
Landesbank Saar Saarbrücken 75 […] 2010
LB(Swiss) Privatbank AG Zürich 50  2009
MKB Bank Zrt (group) Budapest 89,89 9 360,9/[…] […]
DekaBank Frankfurt am Main 3,09  2011
Deutsche Lufthansa AG Cologne 1,98  2013
KGAL GmbH & Co. KG Grünwald 30  […]
LBS Bayern Munich 100 […]/[…] 2012










 12. If any holdings entail any debt financing (‘intra-group funding’) by BayernLB whose duration may extend beyond the date of sale, and BayernLB cannot divest these holdings together with the corresponding debt financing or otherwise receive a guarantee for the debt financing still outstanding, the sale of the holdings may be postponed for a maximum of […] until no later than […].
 13. BayernLB may postpone the sale of the holdings listed above for a maximum of […] until no later than […] if after binding offers have been secured it becomes clear that the price that would be obtained in the transaction would be lower than the current book value of the holding in the individual financial statements drawn up by BayernLB in accordance with the German Commercial Code, or would produce losses in the consolidated financial statement in accordance with the IFRS accounting standards.
 14. Subject to the Commission's approval, BayernLB may postpone a sale of the holdings listed for a maximum of […] until no later than […] if it shows that, because of the macroeconomic circumstances, a sale is not possible or is possible only under ‘fire sale’ conditions.
 15. BayernLB may postpone the full sale of its remaining shares in a holding for a maximum of […] until no later than […] if it shows that by the target date, for economic or legal reasons, it was able to divest itself only of the controlling majority of the holding, and that it did indeed do so.
 16. The proceeds of the sale of BayernLB's holdings, in so far as they outstrip the book value, and result in the planned income statement being exceeded, will be used entirely to finance BayernLB's restructuring plan und will thus be repaid to the Land of Bavaria under point 3 of Annex II.
 17. Existing business in respect of holdings that have not been sold within the deadline indicated will be allowed to expire after that deadline upon the maturity of the underlying business. No new business will be accepted.

D.  18. [Advertising] BayernLB will not use the granting of the aid measures or any advantages over competitors arising therefrom for advertising purposes.
 19. [Restriction of external growth] There will be no expansion of business activities through the acquisition of control over other firms with a sales price of more than EUR [0-2 million] without the Commission's approval (‘no external growth’). Debt-to-equity swaps and other routine credit management measures are not considered to be an expansion of business activities unless carried out with the intention of circumventing the restriction of growth referred to in the first sentence.
 20. [Trading for own account] BayernLB will end dedicated proprietary trading. This means that BayernLB will carry on only trading activities indicated in its trading book that are necessary either (a) for accepting, transferring and executing its customers' sales and purchase orders and hedge instruments directly related thereto (i.e. trading with financial instruments as a service, up to a value measured in value at risk for market price changes of EUR [0-50] million/1 day, 99 % confidence) or (b) for liquidity and ALM management (interest, foreign exchange, management of the liquidity reserve, management of collateral for secured refinancing operations) or (c) for the economic transfer of balance sheet items to the restructuring unit or to third parties. Under no circumstances will BayernLB carry on business activities that serve purely to make a profit apart from the purposes mentioned in (a), (b) or (c) above.
 21. 
The existing board of directors of BayernLB will be transformed into a slimmed-down supervisory board with still greater involvement of external members. The following measures will be taken by 30 June 2013:


((a)) All members of the supervisory board must be fit and proper persons within the meaning of the first sentence of § 36(3) of the German Banking Act (Kreditwesengesetz — KWG). Members are fit and proper persons if they are reliable and have the expertise required to perform supervisory functions, and to assess and monitor BayernLB's business transactions.
((b)) Half the seats allocated to shareholders on the supervisory board will be filled by external expertise.
((c)) Until the end of the restructuring phase the supervisory board will be chaired by a person who is a member of the board in accordance with point 21(b) (‘external expertise’). Thereafter the chairperson will be chosen in accordance with the procedure laid down in German or European law on public limited companies.
((d)) It is also specified here that the seats allocated to shareholders will no longer be filled automatically on the basis of a person's position among the shareholders (elimination of members ‘by birth’).
((e)) The supervisory board will establish an audit committee and a risk committee. The provisions of points 21(a) to (d) will apply by analogy.
((f)) It is specified that the business of the Landesbank will be conducted in accordance with commercial principles, while at the same time taking account of its assigned tasks.
 22. The ‘arm's length’ principle typical of relations between a company and its shareholders applies to the relationship between bank and owners. Excluding any repayment of the aid granted, assets may be distributed to the owners only in the form of balance-sheet profit, capital reductions and proceeds of liquidation; structural measures in connection with dependent institutions within BayernLB remain unaffected.
 23. [Remuneration of bodies, employees and essential agents] BayernLB will verify the incentive effect and appropriateness of its remuneration systems and ensure, within the possibilities under civil law, that they do not result in exposure to undue risks, are oriented towards sustainable, long-term company objectives, and are transparent. The total remuneration to board members and senior management will be restricted to an appropriate level. A cash remuneration (monetäre Vergütung) exceeding EUR 500 000 a year will in principle be considered inappropriate. The restriction referred to in the second and third sentences will continue to apply until BayernLB has paid a total of EUR […] million in accordance with points 2 and 3 of Annex II. Otherwise the restriction referred to in the second and third sentences will continue to apply except that a cash remuneration exceeding EUR […] a year will be considered inappropriate in principle until BayernLB has completed the one-off claw-back payment under point 2 of Annex II and payments totalling EUR […] million under point 3 of Annex II.
 24. 

((a)) BayernLB's employees and essential agents may not receive any inappropriate salaries, salary components, bonuses, or any other inappropriate benefits;
((b)) the remuneration of board members and senior management of BayernLB will be restricted to an appropriate level (see point 23 above), particular account being taken of

— the relevant person's contribution to BayernLB's economic position, especially in the context of previous business policies and risk management, and
— the necessity of a market-oriented salary so as to be able to employ particularly suitable persons who can achieve sustainable economic growth.
 25. [Other rules of conduct] BayernLB's commercial policy will be prudent, sound and oriented towards sustainability. For this purpose, BayernLB will in particular establish a funding plan on a yearly basis and steer its business strategy accordingly. In the context of its lending and investing, BayernLB will take into account the borrowing requirements of the economy, in particular the requirements of small and medium-sized businesses, by applying terms that are in line with market practice and appropriate from a supervisory/banking point of view.
 26. [Transparency] During the implementation of the Decision, the Commission will have unlimited access to all information necessary for monitoring its implementation. The Commission may ask BayernLB to provide explanations and clarifications. Germany and BayernLB will cooperate fully with the Commission in response to any request in connection with the monitoring and implementation of this Decision.
 27. [No servicing of hybrid capital] BayernLB will adhere to a ban on the servicing of hybrid capital. BayernLB will service hybrid capital (such as silent participations (stille Einlagen) and profit participation certificates (Genussscheine)) only if it is obliged to do so even without a release of reserves (Rücklagen) or of the special item referred to in Section 340 f and g of the Commercial Code. […].
 28. [Dividend ban] BayernLB will adhere to a dividend ban in order to meet its payment commitments. BayernLB will not pay dividends in the period until and including the financial year ending 31 December 2018. Payments under points 2 and 3 of Annex II remain unaffected.

E.  29. 
The sum is made up as follows:

(a) Acquisition of LBSThe Bavarian savings banks association will acquire LBS in full for a price of EUR 818,3 million. The date of the purchase (transfer of ownership and payment of the purchase price) will be […]. BayernLB is entitled to the proceeds (Ertrag) for the 2012 business year.(b) Conversion of silent participationsAll silent participations of unlimited duration held by the savings banks in BayernLB will be repaid at the nominal value of around EUR [770-810] million. At the same time the Bavarian savings banks association will inject capital of EUR [810-840] million into BayernLB Holding AG. The repayment of the silent participations and the capital increase will take place no earlier than […] and no later than […]. The new shares of the savings banks association will be determined on the basis of the business valuation of BayernLB Holding AG calculated in accordance with valuation standard IDW S1 at the time of the capital increase. The stake held by the savings banks association will in any event be restricted to a maximum of 25 % and thus will continue to remain below the blocking minority, which is 25 % + one vote.

F.  30. [BayernLabo capital] Having regard to changes in the supervisory requirements under the law as regards the capital adequacy of banks (Basel III) and analogous remarks from BaFin, the arrangements concerning BayernLabo's equity will be adapted to the extent required by the Capital Requirements Regulation (‘CRR’) to ensure that BayernLabo's equity capital as shown in the IFRS group accounts for BayernLB represents hard core capital under the new CRR requirements. The remuneration will be transformed into a CRR-compliant remuneration as on share capital (i.e. dividends); the restriction limiting equity capital to underpinning the business of BayernLabo will be lifted. A sum of EUR 1 billion, which according to the current plans for BayernLabo is not necessary for continuing business operations to the same extent as hitherto, will be transferred to the account of the core bank. The legal earmarking (Zweckbestimmung) of the remaining assets in BayernLabo (including special-purpose assets (Zweckvermögen) and the corresponding special-purpose contribution (Zweckeinlage)) will remain unchanged, so that the statutory task of promotion (Förderauftrag) can be continued without restriction.

G.  31. [Remuneration of the guarantee/claw-back] The agreement concluded between the Land of Bavaria and BayernLB on 19 December 2008 on the provision of a guarantee (the ‘guarantee agreement’) will be amended or supplemented in order to give effect to the following commitments, which are based on the understanding that the difference between the transfer price and the real economic value of the portfolio secured by the guarantee agreement comes to EUR 1,96 billion.
 32. 

((a)) a basic premium of 6,25 % on the initial capital relief effect (at 31 December 2008) of EUR 1,28 billion, i.e. EUR 80 million a year;
((b)) an additional annual premium of 3,75 % on a part of the guarantee totalling EUR 2 billion, i.e. EUR 75 million a year, until 2015; and
((c)) a special payment of EUR 45 million a year until 2015.

H.  33. 

— corporates, small and medium-sized businesses and private customers: […] %;
— real estate, savings banks and associated firms: […] %
— markets: […] %
— restructuring unit: […] %

If these measures result in any further reduction of business, it will not be counted towards the reduction in the balance sheet pursuant to point 4. If the abovementioned reduction in risk positions should lead to the loss of revenue, the bank will offset this loss by reducing costs as appropriate.

At the beginning of the business year […], the bank undertakes to conduct a ‘mid-term review’ of the implementation of this commitment, based on the reports of the monitoring trustee. If on the occasion of the mid-term review the Commission determines that BayernLB is likely to miss the target reduction of risk positions by the end of the business year 2017, BayernLB will have to notify this change afresh, unless it is due to new regulatory or macroeconomic developments.

ANNEX II
1. [Repayments] BayernLB must (where appropriate via BayernLB Holding AG) make a one-off payment of EUR 1,24 billion to the Land of Bavaria (the ‘one-off claw-back payment’) and repay the EUR 3 billion in equity it received as aid in the form of a silent participation in 2008/2009 (the ‘aid repayment’).

2. 
[…]

If the relevant supervisory authority decides that the equity resulting from the entry in the balance sheet of the nominal value of BayernLabo's special-purpose assets (Zweckvermögen) is to be recognised in full or in part as core Tier 1 capital for supervisory purposes, the succeeding tranche of the one-off claw-back payment will be increased by that amount and the further payment schedule will be adjusted in accordance with Table 11.

3. 
[…]

The remaining parts of the silent participation of EUR […] million will be repaid to the Land of Bavaria by 2017 by releasing the capital on the basis of point 33 of Annex I.

4. [Deferral of the payment obligation] If the supervisory authority prohibits BayernLB from making a payment under point 2 or fails to give its consent to repayment under point 3, the repayments provided for in those points must be suspended. In that event the corresponding obligation to pay those amounts must be deferred until the supervisory authority approves or does not prohibit the relevant repayment. If repayment of the amount initially deferred is not approved in the following year or is again prohibited, the Federal Government of Germany will notify a modified restructuring plan to the Commission which, in principle, must contain additional compensatory measures, such as a further balance sheet reduction.

ANNEX III

BayernLB has also sold or will sell the following holdings in accordance with point 11 of Annex I on or by the date indicated:

 Holding Percentage holding (%) Completed/planned exit
1 gewerbegrund Holding GmbH i.L. 100,0 2008
2 Hypo Alpe-Adria-Bank International AG (HGAA) 67,1 2009
3 Kraftwerksgesellschaft Völklingen Geschäftsführ.-GmbH 38,0 2009
4 SCI du 203 Faubourg Saint Honoré 100,0 2009
5 Vulcain Energie 10,0 2009
6 Bayerische Beamtenkrankenkasse AG 1,0 2010
7 Bayerische Landesbrandversicherung AG 1,0 2010
8 Bayerische Versicherungsverband Vers.-AG 1,0 2010
9 BayernLB Corporate Advisers GmbH i.L. 100,0 2010
10 Central 1 Credit Union 0,0 2010
11 Coast Capital Savings Credit Union 0,0 2010
12 Credit Union Central of British Columbia 0,0 2010
13 Energy & Commodity Services GmbH i.L. 100,0 2010
14 Envision Credit Union 0,0 2010
15 Gulf and Fraser Fisherman's Credit Union 0,0 2010
16 GZ-Holdinggesellschaft mbH i.L. 100,0 2010
17 Island Savings Credit Union 0,0 2010
18 IZB Soft Verwaltungs-GmbH & Co. KG 25,1 2010
19 Meridian Credit Union 0,0 2010
20 MKB Általános Biztosító Zrt. 25,0 2010
21 Schlemmermeyer GmbH & Co. KG 20,0 2010
22 Valley First Credit Union 0,0 2010
23 MKB Életbiztosító Zrt. 25,0 2010
24 Vancouver City Savings Credit Union 0,0 2010
25 Münchner Gesellschaft für Stadterneuerung mbH 3,5 2010
26 North Shore Credit Union 0,0 2010
27 Westminster Savings Credit Union 0,0 2010
28 BLB-Grundbesitz-Verwaltungsges. mbH i.L. 100,0 2011
29 German Centre (Shanghai) Limited i.L. 100,0 2011
30 IZB Soft-Beteiligungs-GmbH 25,1 2011
31 Groupement d'Interet Economique (GIE) Spring Rain 100,0 2011
32 […]. […] […]
33 […] […] […]
34 […] […] […]
35 […] […] […]
36 Mietdienst Ges. f. Investitionsgüterleasing mbH & Co. 5,0 2012
37 […] […] […]
38 First Calgary Savings & Credit Union Ltd 0,0 2012
39 First West Credit Union 0,0 2012
40 Interior Savings Credit Union 0,0 2012
41 KSP Unternehmensverwaltungsgesellschaft mbH i.L. 43,0 2012
42 […] […] […]
43 […] […] […]
44 […] […] […]
45 […] […] […]
46 […] […] […]
47 […] […] […]
48 […] […] […]
49 […] […] […]
50 Siacon GmbH i.L. 50,0 2013
51 […] […] […]
