EU General Court: a “private investor” may accept loss

I like finding patterns of “private investor” behavior in State aid cases. This mythical creature remains unpredictable, and therefore every example of her character is extremely interesting. The EU General Court adjudicated on 02/03/2012 that in certain circumstances a State acting as a “private investor” in State aid matters can accept loss, and annulled the respective provisions of the Commission’s Decision.

The Dutch Government decided to back the ING Bank during the global financial crisis in 2008. The Government subscribed to ING securities for € 10 billion, provided guarantees for ING liabilities amounting to € 11 billion, and took other measures (§ 8). The European Commission authorized the aid, however then the ING and the Netherlands amended the terms of repayment making it more favorable for the Bank.

The Commission insisted that the new repayment conditions meant a loss between € 1.5 and 1.9 billion for the State (§ 84). The EU General Court’s answer is that the Dutch Government behaved as a “private investor”, since (§ 125):

1. The new conditions allowed the Government to be repaid earlier.
2. When the amendment occurred it obtained a greater certainty of being repaid in a “satisfactory manner”.