The European Commission has approved Romania’s plans to inject 200 million euros of capital in the state-owned CEC Bank. The commission found that the recapitalisation will be carried out on market terms and therefore involves no state aid.
Commissioner Margrethe Vestager, in charge of competition policy, said: “The EU Treaty is neutral when it comes to public versus private ownership. We found that the Romanian government, as the sole owner of CEC Bank, would carry out a capital injection in the bank at the same conditions that a private market operator would accept. We therefore concluded that the recapitalisation of the bank did not involve State aid within the meaning of our rules.”
In October 2019, Romania notified the commission its intention to recapitalise CEC. The objective of the recapitalisation is to enhance the bank’s lending capacity and launch a substantial upgrade of the bank’s information technology systems in order to continue servicing its customers, improve efficiency and decrease operational risk.
Under EU rules, if a member state intervenes as a private investor would, and is remunerated for the risk assumed in a way a private investor would accept, such intervention does not constitute state aid.
The commission’s assessment of the business plan submitted by Romania showed that the 200 million-euro capital injection would yield a return on investment to the Romanian state (as the bank’s sole shareholder) in line with market conditions. The business plan notably foresees an increase in the bank’s lending and deposit market share, improved efficiency and robust capital levels.
The bank, founded in 1864 and owned by the Romanian state ever since, is currently the seventh largest in the country.
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