
Article 1 
The 2016 measures which Germany is planning to implement for HSH Nordbank do not constitute State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union.
Article 2 
The 2013 measure, a re-increase in the second-loss guarantee provided by the Finanzfonds to HSH Nordbank, in the amount of EUR 3 billion constitutes State aid within the meaning of Article 107(1) TFEU and it is compatible with the internal market, in light of the commitments set out in Annex I of the present decision.
Article 3 
This Decision is addressed to the Federal Republic of Germany.
Done at Brussels, 2 May 2016.
For the Commission
Margrethe VESTAGER
Member of the Commission
ANNEX I
Germany undertakes to implement the following commitments:

1.  1.1. [Restructuring phase] The restructuring phase ends with the conclusion of the sale procedure. The following commitments apply during the restructuring phase, unless the specific wording of the commitment in question states otherwise.
 1.2. [Monitoring trustee] During the restructuring phase, the full and proper implementation of all the commitments 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 HSH.

2.  2.1. [Setting up the holding company] HSH will be split into a holding company (‘HoldCo’) and a subsidiary to be sold (‘OpCo’).
 2.2. [Subsidiary] OpCo will hold all the assets and liabilities of HSH, including the assets covered by the guarantee (unless they are sold to the Länder in accordance with point 4, the guarantee itself and the banking licence. In order to ensure the operation of HoldCo, OpCo will provide HoldCo with cash of EUR 50 million.
 2.3. [Holding company] The asset side of HoldCo's balance sheet consists of the stake in OpCo, in addition to the cash referred to in points 2.2 and 3.3 HoldCo will hold at least 90 % of the shares in OpCo until the sale.

3.  3.1. [Allocation of obligations under the guarantee] The contract on the provision of a guarantee framework concluded between HSH Finanzfonds AöR and HSH on 2 June 2009 will be amended as follows:
As remuneration for the receipt of the capital relief effect, OpCo will pay a 2,2 % basic premium on the part of the guarantee that has not yet been drawn.
All other obligations of HSH under the guarantee provision contract described in the authorisation decision of 20 September 2011, C 29/2009 (ex N 264/2009), i.e.

((a)) 2,2 % basic premium as remuneration on the drawn part of the guarantee;
((b)) 1,8 % basic premium as claw-back payment; and
((c)) 3,85 % additional premium, including the debtor warrant,
including all existing balance-sheet reserves relating thereto, will be transferred to HoldCo with effect from 1 January 2016.
 3.2. [Matching clause] The transfer of the obligations under the guarantee to HoldCo has no effect on the total guarantee liabilities to be paid under the authorisation decision of 20 September 2011, C 29/2009 (ex N 264/2009).

((a)) The rules in the guarantee provision contract of 2 June 2009 remain unchanged after the implementation of the Commission's conditions in the authorisation decision, subject to the changes resulting from the allocation of the premium obligations under point 3.1.
((b)) The minimum common equity ratio of 10 % relevant to the debtor warrant will be calculated until the sale using the capitalisation of the whole group and, in the event of a successful sale, using the capitalisation of HoldCo. Should the sale procedure not be concluded successfully, the relevant ratio will continue to be calculated using the level of capitalisation of the whole group.
((c)) In the event of the sale of shares in OpCo, the amount of the additional premium of 3,85 % taken over by HoldCo may, at the initiative of the public-sector owners, be reduced proportionally to their direct and indirect shareholding.
 3.3. [Performance of guarantee obligations] The proceeds which HoldCo obtains from the sale of its shares in OpCo will be used primarily to satisfy the transferred premium obligations. In order to ensure that HoldCo is protected from insolvency, suitable measures will be agreed between HSH Finanzfonds AöR and HoldCo, specifically a qualified subordination of claims under the guarantee. If the sale procedure is not concluded successfully, the Länder will, as far as legally possible, reverse the effects of the subordination of claims and use the liquidation proceeds primarily to satisfy outstanding obligations under the guarantee.
Furthermore, OpCo will make a lump-sum payment of EUR 210 million to HoldCo in order to service the premium obligations assumed by HoldCo during the current sale procedure. The 2,2 % basic premium assumed by HoldCO as remuneration on the drawn part of the guarantee has to be paid from the moment the guarantee is invoked in particular as a result of the sale of assets according to point 4. The bank intends to sell assets according to point 4 not before the end of June 2016. Up to the point in time of such a sale, OpCo remains obliged to pay this 2,2 % basic premium. Should HoldCo not have sufficient cash at its disposal on a payment due date to fully service the outstanding premium payments, or should legal obstacles stand in the way of payment, in particular because of a breach of the capital maintenance requirements or the existing subordination of claims, or if that results in HoldCo becoming insolvent, then that part of the outstanding premium payments may be deferred until the next payment due date against a market rate of interest of 10 %.

4.  4.1. [Sale of assets] HSH may sell assets of up to EUR 8,2 billion Exposure at Default (EAD) and settle the losses arising with HSH Finanzfonds AöR in accordance with the conditions in the existing guarantee agreement, of which up to EUR 6,2 billion EAD to the Länder. The bank intends to initially transfer in 2016 a portfolio of EUR 5 billion EAD to the Länder. The sale will take place at market value. This will not affect HSH's right to continue to sell assets on the market and settle in accordance with the conditions in the existing guarantee agreement.
 4.2. [Flexibility in the selection of the assets to be transferred] In order to establish the purchase price of the selected assets, the Länder will use the valuation in the annex to this list of commitments. The Länder are free to determine the market price for parts of the selected assets on the basis of this valuation and to transfer the assets into their sphere, provided that the selected portfolio does not exceed EUR 6,2 billion EAD. During the sale period, the selected assets may be bought all together by the Länder but also individually or in lots. For transfers made after 31 August 2016, the Commission will update the valuation.

5.  5.1. [Sale procedure] Subject to point 5.3, HoldCo will sell its shares in OpCo by 28 February 2018 (‘sale deadline’) through an open, non-discriminatory, competitive and transparent procedure (‘sale procedure’). The sale deadline is observed by the signing of a sale contract.
 5.2. [Extension of the sale deadline] The deadline referred to in point 5.1 may be extended by 6 months with the agreement of the Commission, if the technical implementation of the model is delayed because of circumstances over which the Länder have no direct influence.
 5.3. [Transitional period forLändershareholdings] The Länder are entitled to retain up to 25 % of the shares in OpCo through their direct and indirect holdings in HoldCo for up to four years from the completion of the sale.
 5.4. [Timetable and milestones for the sale procedure] Before the start of a sale procedure, a timetable containing at least the following milestones will be submitted to the Commission:

((a)) preparation of the procedure (no later than […]);
((b)) submission of provisional bids (no later than […]);
((c)) access to the data room (no later than […]);
((d)) bidder selection and signing (no later than 28 February 2018).
 5.5. [Qualification of the buyer(s)] The bidders taking part in the sale procedure must have the necessary financial resources and demonstrable industry-relevant expertise to manage OpCo as a profitable and active competitor.
 5.6. [Independence of the buyer(s)] The buyer(s) of OpCo must be independent of HSH and the public sector. That will be the case if neither HSH nor the public sector is able to exercise control within the meaning of Article 3 of Council Regulation (EC) No 139/2004 over any of the buyers at the time of sale. The term ‘public sector’ includes the Federal State, all Länder and municipalities and their public institutions as well as undertakings controlled by them. A sale to one or more Landesbank(en) is possible. Public savings banks (öffentliche Sparkassen) may take part — jointly with a minority shareholding — in a purchase through another buyer that is independent of HSH and the public sector (excluding Landesbanken).
 5.7. [Successful conclusion of the sale procedure] After a successful completion of the sale procedure with the outcome of an aid-free offer with a positive offer price (while maintaining the guarantee), the intended acquisition will be notified to the Commission for the purpose of an assessment of the viability of the new company structure. The sale will not be implemented until the Commission has adopted an approval decision. The time taken for the assessment does not count towards the sale deadline.
 5.8. [Change of name] The bank will adopt a new name within 3 months of the successful completion of the sale procedure.
 5.9. [Cessation of new business upon a non-successful conclusion of the sale procedure] Where the sale procedure by the end of the sale deadline does not result in aid-free offers with a positive offer price (while maintaining the guarantee), or the Commission concludes the viability assessment pursuant to point 5.6 with the conclusion that the integration of OpCo into the new company structure will not lead to a long-term viable business model, OpCo will cease its new business and, as far as legally possible, administer its assets with the objective of an orderly wind-down. In that case the following continue to be permitted:

((a)) restructuring of existing loans in order to maintain value, provided that those loans fall under the management of problem loans;
((b)) business necessary for OpCo's cash management, with the exception of the acceptance of new deposits, including new deposits by existing customers; the rolling over of maturing deposits on the same terms remains permissible;
((c)) prolongations which are necessary to avoid losses, provided that they offer significantly better prospects of final realisation;
((d)) derivative transactions which are necessary in order to manage interest-rate, currency and credit risks in the existing portfolio and result in a reduction of OpCo's overall market risk position;

6. [Obligations during the sale period] During the sale period, HoldCo will manage OpCo with the aim of retaining its viability, saleability and competitiveness. To that end,

((a)) additional cost-reduction and rationalisation measures will be taken at OpCo in accordance with the submitted restructuring plan, so that the administrative costs will not exceed EUR [570-590] million in 2016 and EUR [520-550] million in 2017;
((b)) OpCo's risk management, in particular in relation to new business, will be carried out in accordance with the principles of prudent business practice;
((c)) measures will be taken to further strengthen the capital base (including liability management), subject to approval by the Commission;
((d)) OpCo may not make any payments in respect of profit-related equity instruments (such as hybrid financial instruments and participation certificates [Genussscheine]), in so far as those payments are not owed under contract or law. Those instruments will also have to participate in losses, if OpCo's balance sheet, without release of reserves and retained earnings, shows a loss. There will be no participation in losses carried forward from previous years, and
((e)) OpCo will not pay any dividends until the sale (i.e. for the period including the business year ending on 31 December 2017). This does not preclude dividend payments by OpCo to HoldCo to the extent legally possible.

7.  7.1. [Reduction of balance sheet total — OpCo] OpCo's total balance sheet assets will not exceed EUR [100-110] billion in 2016, and EUR [90-100] billion in 2017 (total balance sheet assets of OpCo). Of this amount, trading assets will account for no more than EUR [5-12] billion.
 7.2. [Withdrawal from object-related aircraft financing] In accordance with the List of Commitments of the Decision of 20 September 2011, OpCo will not resume the object-related aircraft financing activities discontinued by HSH.
 7.3. [Restriction of the corporate business] OpCo must restrict its business with corporate clients to German customers and their domestic and foreign participations, and to foreign clients that seek business in Germany. Business is restricted to existing locations, and no new locations will be opened.
 7.4. [Definition of the ship financing business] OpCo's shipping division acts as a strategic partner for clients, including shipowners in the global shipping and shipbuilding sector. In contrast to the shipping division, the corporate business division will not be active in object-related ship financing.
 7.5. [Downsizing of the ship financing business] OpCo will cut back its ship financing business by restricting its annual new business in this area to EUR [1-2] billion. New business of this magnitude would not fully compensate for the repayments that are currently planned.
 7.6. [EUR/USD exchange rate] The commitments in points 7.1 and 7.5 regarding the balance sheet total and the scope of new business in the ship financing division are based on an average EUR/USD exchange rate of 1,10. If the actual rate is lower than that reference rate, the maximum amounts mentioned there must be adjusted upwards accordingly.

8. [Restriction of external growth] Until the end of the sale deadline, an expansion of business activities through the acquisition of control of other companies is not permitted (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.

9. [Sale of parts of the business] The sale of parts or subparts of the business with the approval of the public-sector owners is compatible with this Decision.

10. [Proprietary Trading] OpCo does not undertake dedicated proprietary trading. This means that OpCo carries 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 (i.e. trading with financial instruments as a service, up to a value measured in value at risk (VaR) of EUR […] million/1 day, 99 % confidence); or (b) for hedging customer business, or interest and liquidity management in the treasury sector (so-called trading for own account, up to a value measured with value at risk (VaR) of EUR […] million/1 day, 99 % confidence); or (c) so that the economic transfer of balance sheet items to the restructuring unit or to third parties can be carried out (up to a value measured in value at risk (VaR) of EUR […] million/1 day, 99 % confidence). As those positions can be taken on only within the limits defined above, they cannot jeopardise the sustainability or liquidity situation of OpCo. Under no circumstances will OpCo carry out business activities that serve purely the realisation of profit, outside the purposes mentioned in (a), (b) or (c). Moreover, OpCo will implement punctually the specifications in the supervisory requirements, ‘Fundamental Review of the Trading Book’ (FRTB).

11. [Liquidity/Funding]
By the end of 2016 and 2017 respectively, OpCo will adhere to the following liquidity ratios:

((a)) Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR) of […] to […] %. The calculation will be carried out on the basis of the definitions published at the time by the Basel Committee on Banking Supervision;
((b)) the share of the core bank's USD business that is refinanced by means of original USD funding (and not by swaps) will develop as follows from 2016 to 2017: at least 55 % by the end of 2016 and 2017 respectively.

12. [Advertising] HSH will not use the granting of the aid measures or any advantages over competitors arising therefrom for advertising purposes.

13. [Assurances regarding corporate governance] The following applies in respect of OpCo's corporate governance:

((a)) all members of the supervisory board must have the competences stipulated in the first sentence of Section 25d(2), phrase 1 of the German Banking Act (Kreditwesengesetz — KWG). Members are competent if they are reliable and have the expertise required to perform control functions, and to assess and monitor OpCo's business transactions.
((b)) there may be no more than sixteen supervisory board members.
((c)) at least half the seats allocated to the Länder of Hamburg and Schleswig-Holstein will be occupied by external experts.

14.  14.1. [Remuneration system] Within the framework of the possibilities under civil law, OpCo will ensure that its remuneration systems do not encourage undue risk-taking, are in harmony with sustainable, long-term company objectives, and are transparent. That obligation will be satisfied if OpCo's remuneration systems meet the requirements in the Annex ‘Obligations of HSH’ to the ‘Contract on the provision of a guarantee framework’ of 2 June 2009.
An appropriate bonus can be paid (‘privatisation bonus’) following successful privatisation. The maximum amount paid may not cause the total remuneration of individuals to be in conflict with the requirements under point 14.2.
 14.2. The total remuneration for OpCo's representatives and employees will be appropriate, and may under no circumstances exceed 15 times the national average salary in Germany or 10 times the average salary at HSH Nordbank (before the split-up).

15. [Other rules of conduct] In the context of its lending and investing, OpCo will take into account the borrowing demand of the economy, in particular of small and medium-sized companies (the ‘Mittelstand’), through conditions that are market based and appropriate from a supervisory/banking point of view. OpCo's commercial policy will be prudent, sound and oriented towards sustainability. OpCo will conduct its banking business in such a way as to retain the value of the assets and businesses, increase the bank's saleability, and ensure that the sales process is as stable as possible.

16. [Transparency] During the implementation of the Decision, the Commission will have unlimited access to all information necessary for monitoring its implementation. The Commission can ask OpCo or HoldCo to provide explanations and clarifications. Germany, OpCo and HoldCo will cooperate fully with the Commission in response to any request in connection with the monitoring and implementation of this Decision. This does not affect compliance with mandatory banking secrecy requirements.

17. [Cancellation of obligations] The commitments in this Annex and the previous approval decision cease to apply with the sale, or in any case the expiry of the sale deadline, provided that nothing to the contrary is stated explicitly in the relevant commitment.

ANNEX II

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