Various media outlets reported on the March 2, 2012 decision of the General Court of the European Union partially upholding ING Groep NV’s challenge to the restructuring terms resulting from state aid measures imposed by EU regulators after the 2008 financial crisis. According to Bloomberg, the ruling will “forc[e] European Union regulators to re-examine the conditions they imposed on the Dutch lender’s government rescue in the wake of the 2008 financial crisis.” The General Court’s decision was an appeal of a November, 2009 decision of the Commission of the European Communities, which itself was preceded by “a number of administrative procedures.”
ING issued a press release stating it “welcomes” the judgment, and explaining that:
In order to get approval from the European Commission for the support measures, ING had to file a restructuring plan with the European Commission, which was approved in November 2009. In January 2010 ING announced that it would appeal specific elements of the European Commission’s approval decision. Specifically, ING appealed the way the EC calculated the amount of State aid received, the disproportionality of the price leadership restrictions ING was subjected to and the overall disproportionality of the restructuring requirements. The Dutch State also filed an appeal on the first ground mentioned above.
The General Court’s March 2 decision held that it “annul[ed] the Commission decision in so far as it is based on finding that the amendment to the repayment terms for the capital injection constitutes additional aid of approximately €2 billion and assesses, consequently, the compatibility of the aid with the common market, and in particular the extent of the compensatory measures, with reference to such aid.” Reuters reported that “[u]nder EU Rules, the extent of restructuring depends on the amount of state aid ING received” and that “as a result of the 2 billion euros not counting as state aid, ING might need to sell fewer operations.” The General Court did not reach ING’s arguments concerning other portions of the restructuring commitments, finding that “those commitments assume that the restructuring aid … has been correctly classified, which is not so in the present case.”
The WSJ summarized reactions to the decision, reporting that:
Lawyers involved in other restructurings say the ruling shows that Europe’s strategy of seeking huge reductions in the size of bailed-out banks—already criticized by some economists as inflicting heavy damage on the European economy—has been sloppily executed. Some settlements are likely to be revisited, lawyers say, and those banks still negotiating with the EU will have a stronger hand.
EU officials say the balance-sheet reductions are needed to ensure banks receiving aid get rid of unsustainable businesses, repay the aid and don’t gain a competitive advantage because they received government support. They also estimate that just 2.5% of EU banking assets have been subject to selling requirements since the crisis hit.