
Article 1 
The restructuring aid which Denmark has implemented in favour of Vestjysk Bank is compatible with the internal market within the meaning of Article 107(3)(b) of the Treaty, subject to the commitments listed in the Annex.
Article 2 
This Decision is addressed to the Kingdom of Denmark.
Done at Brussels, 18 July 2017.
For the Commission
Margrethe VESTAGER
Member of the Commission
ANNEX
1. 
The Kingdom of Denmark (‘Denmark’) shall ensure that Vestjysk Bank A/S (‘Vestjysk’ or the ‘Bank’), implements the restructuring plan submitted on 14 June 2017.

Denmark hereby provides the following commitments (the ‘Commitments’) which are integral part of the said restructuring plan.

The Commitments shall take effect upon the date of adoption of the European Commission's (the ‘Commission’) decision approving the restructuring plan (‘Decision’).

The text of the Commitments shall be interpreted in the light of the Decision and the general framework of Union law, and by reference to Council Regulation (EU) 2015/1589.

Denmark shall ensure that Vestjysk shall take the measures necessary to correctly and fully comply with the present Commitments until the end of the Restructuring Period.

2. 
For the purpose of the Commitments, the following terms shall mean:

1. Core Regionthe region of Jutland.2. Decisionthe decision of the Commission authorising the State aid measure and approving the restructuring plan of Vestjysk in case SA.34720 and dated [insert].3. Effective Datethe date of adoption of the Decision.4. Funding Ratiothe ratio of lending over the stable funding in the form of working capital except bonds with a residual maturity less than one year.5. LCRliquidity coverage ratio.6. Monitoring Trusteeone or more natural or legal person(s), independent from Vestjysk who is approved by the Commission and appointed by Vestjysk, and who has the duty to monitor Vestjysk's compliance with the Commitments.7. Restructuring Planthe restructuring plan (business plan as updated and submitted to the Commission in June 2017) of Vestjysk approved by the Decision.8. RoEreturn on equity after tax.9. RoE at client levelRoE before tax on the client relationship level calculated based on a funding transfer price commensurate with a maturity matching funding cost and adjusted for risk costs. This calculation includes the volume weighted average of all loans with a single client; other fee business or banking transactions contributing to the profitability of the relationship with the same client can also be taken into account, so that a new loan might generate a lower return if it is compensated by revenues of other fee business or banking transactions.10. State HybridsThe subordinated bonds subscribed by Denmark (in Danish: hybrid kernekapital udstedt under bankpakke II).
For the purpose of the Commitments, the singular of those terms shall include the plural (and vice versa), unless the Commitments provide otherwise.

3.  3.1. Denmark undertakes to ensure that the Commitments are fully observed during the implementation of the Restructuring Period.
 3.2. The Restructuring Period shall end on 31 December 2018, provided that Vestjysk reaches a RoE of [7-11] % on the basis of the final audited annual accounts for 2018 and, if such RoE is not reached for 2018, it shall end on 31 December 2019, based on a final report by the Monitoring Trustee with respect to the commitments applying in that year. The Commitments apply during the Restructuring Period, unless otherwise provided.

4.  4.1. Vestjysk shall throughout the Restructuring Period maintain capital at least equivalent to the higher of (i) 2 % of its total risk exposure amount and (ii) DKK 325 million in excess of the sum of the solvency need and the combined buffer requirement under applicable law and regulation.
 4.2. 

— Vestjysk shall maintain a LCR of at least 100 % measured in accordance with applicable law and regulation.
— Vestjysk shall maintain excess liquidity coverage of at least 50 % of the liquidity coverage requirement under applicable law and regulation.
— Vestjysk shall maintain a funding ratio of a maximum of 1 measured in accordance with applicable law and regulation.
 4.3. Vestjysk's balance sheet size for 2017 shall not be higher than for 2016 and it shall not exceed DKK 20 300 million in 2018 and 21 000 million in 2019 (if applicable).
 4.4. 

— Net lending including guarantees to the Real Estate sector shall not account for more than 25 % of the total net lending (loans to clients) including guarantees at any given time.
 4.5. Net lending measured as average net lending per year to agriculture, hunting, forestry and fishing shall on 31 December of any given year not exceed its share in total net lending as on 31 December 2016 (i.e. 20 % of total loans to clients as defined above) if and to the extent such excess net lending is the result of lending to new customers or an increase of such lending to existing customers.
 4.6. Vestjysk shall not provide new lending to clients outside the Core Region, unless the customer provides own financing of at least [35-45] % and the loan is collateralised. Vestjysk shall not provide new lending relating to assets outside Denmark.
 4.7. 
Vestjysk may not take on any credit risk exposures with new customers, where any such exposure on its own constitutes more than 10 % of the total capital at the given time.

5.  5.1. 

((i)) Exemption: Vestjysk may acquire stakes in undertakings provided that:

((a)) The purchase price paid by Vestjysk for any acquisition is less than 0,01 % of the balance sheet size of Vestjysk at the Effective Date; and
((b)) The cumulative purchase prices paid by Vestjysk for all such acquisitions starting with the Effective Date until the end of the Restructuring Period, is less than 0,025 % of the balance sheet size of Vestjysk at the Effective Date.
((c)) The acquisition directly follows from previously existing (before this Decision) contractual obligations assumed with third parties or regulatory related obligations, or is required by a final and mandatory decision taken by a public authority on Vestjysk
((ii)) Activities not falling under the acquisition ban: The acquisition ban shall not cover acquisitions (i) that take place in the ordinary course of the banking business in the management of existing claims towards ailing firms, including the conversion of existing debt to equity instruments, or (ii) as part of ordinary treasury activities.
 5.2. Advertising: Vestjysk must not use the granting of the aid measures or any advantages arising therefrom for advertising purposes.

6.  6.1. The Bank will further improve and centralise the risk management for its major customers by creating a centralised business banking department.
 6.2. The total recurrent operating (staff expenses, branches, administrative and other operational costs) and amortisation costs of Vestjysk shall not exceed DKK [435-475] million in 2017, DKK [420-460] million in 2018 and DKK [405-445] million in 2019 (if applicable) (such figures to be increased by any amount resulting from additional requirements imposed on Vestjysk under applicable law or regulation including without limitation payroll tax (in Danish: lønsumsafgift)).

7.  7.1. Vestjysk shall completely redeem its State Hybrids at par together with any accrued interests in accordance with applicable law and regulation, within 6 months of the Effective Day.

8.  8.1. 

8.1.1. In 2017, 2018 and 2019 (if applicable) present a report in the form enclosed to this Decision to the Monitoring Trustee showing a distribution of the pre-tax ROE of the Bank's business clients (which include all SMEs) and, for consumer clients, average gross earnings with credit quality grades as set out in section 8.1.6.
8.1.2. In 2018 and if applicable in 2019, prepare a strategy demonstrating how the profitability of the Bank's client relationships will be increased. This strategy must be sufficiently detailed, clarifying among others the targeted customer segments, proposed income-increasing measures (including the possibility to terminate unsatisfactory client-relationships).
8.1.3. In 2018, price every new loan (considering as new loan any new business not related to an existing transaction) by using an appropriate internal pricing tool or in the case of consumer client exposures using appropriate internal pricing guidelines and a centralised demonstration that pricing guidelines support a gross average earnings per customer of at least DKK [2 800 — 3 300] based on a standardised model family. Pricing for new loans to business clients will be considered adequate if the new loan contributes to achieve a positive RoE at client level of at least [8-12] % pre-tax in 2018.
8.1.4. From 2019 onwards (if applicable) ensure that, to the extent legally possible, every client relationship (and not just new loans) shall be priced in accordance with clause 8.1.3 above. A failure to demonstrate a positive RoE at client level of at least [8-12] % pre-tax for individual business client relationships exceeding an exposure of DKK [2,2-2,7] million at the moment of pricing will lead to an escalation of the credit files to the Management Board for formal approval by a reasoned decision.
If the total amount of exceptions for all business client relationships, regardless of their size, that do not meet the mentioned hurdle rate exceeds [2-3] % of the Bank's audited net loan exposure (at the end of the previous financial year) within the financial year, Vestjysk shall, to the extent legally possible, (i), in relation to business clients, ensure a reduction of the amount of net loan exposure to business clients that does not meet the mentioned hurdle rate by [18-25] % compared to the previous financial year and (ii), in relation to consumer clients, ensure an increase in average gross earnings of [4-8] % from the current level of DKK [2 800-3 300] to the minimum level of DKK [2 800-3 300].
8.1.5. For the purpose of these calculations for business clients, new loans will have a credit documentation demonstrating a pre-deal calculated RoE at client level for either the individual loan or other live exposure on single client including fee business or banking transactions. The above-mentioned new loans shall have a credit documentation demonstrating this pre-deal calculated RoE at client-level at the moment of the credit decision and for any financial year thereafter.
8.1.6. Credit deals not falling under this pricing policy regime: restructuring cases (credit quality (in Danish: udlånsbonitet) grade of 1 and 2c pursuant to the DFSA's general customer classification system) for which a restructuring or recovery plan (in Danish: kredithandlingsplan) has been prepared and all money market transactions.

9.  9.1. If the targets mentioned in section 4.3 in a given year are not achieved due to contingencies outside of the bank's control and if the difference between the actual results and the targets exceeds 7 %, Denmark shall present to the Commission a proposal containing a justification and remedy measures to ensure future compliance with the targets or an adequate compensation, or proposing alternative actions aimed at achieving the same purpose of the initial targets that were not met.

10.  10.1. Denmark shall ensure that the full and correct implementation of the Restructuring Plan and the full and correct implementation of all Commitments within this Term Sheet are continuously monitored.
 10.2. A Monitoring Trustee shall report semi-annually to the Commission on the evolution of the restructuring plan and the above mentioned commitments until the end of the Restructuring Period. The reference dates for the semi-annual Reporting are the 31 of December and the 30 of June. The Semi-annual Reporting shall be forwarded within 2 months from the reporting dates each year during the Restructuring Period. The final report for reference date 31 December 2019 (if applicable) shall cover the entire year 2019.

11.  11.1. Denmark shall appoint a Monitoring Trustee whose mandate is to report to the Commission on compliance by Denmark and by the Bank with the Commitments.
 11.2. The Monitoring Trustee shall be independent of the Bank and shall possess the necessary qualifications to carry out its mandate, for example as an investment bank or consultant or auditor, and shall not be subject to a conflict of interests throughout the exercise of his mandate.
 11.3. The Trustee shall be remunerated by the Bank in a way that does not impede the independent and effective fulfilment of the Trustee's mandate.
 11.4. 

((i)) The full terms of the proposed mandate, which shall include all provisions necessary to enable the Trustee to fulfil its duties under these Commitments;
((ii)) The outline of a work plan which describes how the Monitoring Trustee intends to carry out its assigned tasks.
 11.5. The Commission shall have the discretion to approve or reject the proposed Trustees and to approve the proposed mandate subject to any modifications it deems necessary for the Trustee to fulfil its obligations. If only one name is approved, Denmark shall appoint or cause to be appointed, the individual or institution concerned as Trustee, in accordance with the mandate approved by the Commission. If more than one name is approved, Denmark shall be free to choose the Trustee to be appointed from among the names approved. The Trustee shall be appointed within one week of the Commission's approval, in accordance with the mandate approved by the Commission.
 11.6. If all the proposed Trustees are rejected, Denmark shall submit the names of at least two more individuals or institutions within one week of being informed of the rejection.
 11.7. If all further proposed Trustees are rejected by the Commission, the Commission shall nominate a Trustee, whom Denmark shall appoint, or cause to be appointed, in accordance with a trustee mandate approved by the Commission.
 11.8. The Trustee shall assume its specified duties in order to ensure compliance with the Commitments. The Commission may, on its own initiative or at the request of the Trustee or Denmark or the Bank, give any orders or instructions to the Trustee in order to ensure compliance with the Commitments. The Bank and Denmark are not entitled to give instructions to the Trustee.
 11.9. 

((i)) Propose to the Commission a detailed work plan describing how it intends to monitor compliance with the Commitments. The report should be delivered by 31 December 2017 at the latest;
((ii)) Monitor the compliance with the Commitments with quarterly reports;
((iii)) Propose such measures as the Monitoring Trustee considers necessary to ensure Denmark's and the Bank's compliance with the Commitments;
 11.10. The Bank shall provide and shall cause its advisors to provide the Monitoring Trustee with all such cooperation, assistance, managerial, administrative support and information as the Monitoring Trustee may reasonably require to perform its tasks.
 11.11. If the Trustee ceases to perform its functions under the Commitments or for any other good cause, including the exposure of the Trustee to a conflict of interest:
 11.12. The Commission may, after hearing the Monitoring Trustee, request Denmark to replace the Trustee; or
 11.13. Denmark, with the prior approval of the Commission, may replace the Trustee.
 11.14. If the Trustee is removed, the Trustee may be required to continue in its function until a new Trustee is in place to whom the Trustee has effected a full hand over of all relevant information. The new Monitoring Trustee shall be appointed in accordance with the procedure referred in clauses 11.4-11.7.
 11.15. Besides the removal, the Trustee shall cease to act only after the Commission has discharged it from its duties after all the Commitments with which the Trustee has been entrusted have been implemented. However, the Commission may at any time require the reappointment of the Trustee if it subsequently appears that the relevant remedies might not have been fully and properly implemented.
