Billions of euros for Banco CAM’s bailout constitute permissible state aid

The European Commission has approved the restructuring aid that Spain granted to Banco CAM. In July 2011, the Bank of Spain placed the beleaguered Banco CAM under the control of the Fondo de Reestructuración Ordenada Bancaria (FROB), which provided a €2.8 billion capital injection and a €3 billion liquidity line. Banco Sabadell then agreed to buy Banco CAM’s banking business in December 2011, following an open tender. As part of the sale, the Spanish Deposit Guarantee Fund and FROB granted three additional measures: (1) a guarantee for ten years on losses, estimated to be between €7.2 and €8.2 billion; (2) a second capital injection of €2.4 billion; (3) a contingent grant of up to €0.7 billion.

The Commission determined that the aid was necessary to allow for Banco CAM to be sold to Banco Sabadell. After the sale of the banking business, CAM will continue to operate only as a special charitable foundation.

Full content: EC Press Release

Related content: Competition Policy, Bailouts, and the Economic Crisis

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