OpenLegislation

Division 2 Restriction of new business to the PBB sub-group

United Kingdom

Original text. Later amendments are not shown.

Germany will ensure that, as of notification of the final Commission decision on the compatibility of the State aid implemented for HRE with the common market (‘decision’) at the latest, HRE restricts its new business to the PBB sub-group. Germany will ensure that all other HRE companies conduct no new business but allow their existing business to run down. The PBB sub-group will become active as a specialised commercial bank for Pfandbrief-eligible real estate finance and Pfandbrief-eligible public investment finance in the countries referred to in paragraph 8.4:

  1. (i)

    In the business line of real estate finance all activities of the PBB sub-group in commercial real estate finance will be associated with professional real estate clients.

  2. (ii)

    The business line of public investment finance will comprise exclusively medium- or long-term financing of public projects which are either in the public interest or serve to safeguard the productivity potential, including services which are closely linked with such financing.

    1. (a)

      The product catalogue of the PBB sub-group will therefore be limited to investment financing of the following activities:

      1. (I)

        public sector facilities (administrative and special-purpose facilities, educational and cultural establishments, and sports facilities);

      2. (II)

        construction of local authority housing (social housing, housing associations, student housing);

      3. (III)

        utility supply and waste disposal (energy generation, water collection and supply, waste water disposal and processing, refuse disposal and recycling);

      4. (IV)

        essential infrastructure (networks and facilities for road, waterway, rail and air transport, transport and equipment fleets for local and long-distance transport, and systems and facilities for intelligence and defence);

      5. (V)

        health and age care (medical health and care facilities and administrative and insurance facilities).

    2. (b)

      With regard to customers within the public sector, the PBB sub-group will restrict itself to:

      1. (I)

        financing which is concluded directly with a public-sector borrower that is recognised as eligible for cover under the German Pfandbrief Act on the basis of a specific restricted use commitment, in accordance with the above product catalogue;

      2. (II)

        financing for companies with a public or private legal status and financial basis which are secured by a public guarantee within the meaning of the Pfandbrief Act (transport and utility companies, public utility companies, special-purpose associations, management companies, non-profit businesses, associations);

      3. (III)

        financing for special-purpose companies secured by a public guarantee within the meaning of the Pfandbrief Act (special-purpose companies for PPP/PFI projects, investment companies for buildings and facilities, capital goods covered by an export credit guarantee/ECA).

    3. (c)

      With regard to the financing structures, these activities will take account of the cash flows generated by the project/object and/or a public guarantee or other public safeguard within the meaning of the Pfandbrief Act. A report on expenditure of funds will be obtained for all new public investment financing. Public investment financing by the PBB sub-group will not include financing of purely budgetary resources, liquidity bridging, short-term lending and advances on current accounts for day-to-day operation.

  3. (iii)

    The PBB sub-group can undertake restructuring and prolongation of existing assets in so far as this is necessary in order to maintain value and for efficient management of the cover pools.

  4. (iv)

    In so far as is necessary for regulatory or other legal reasons (e.g. requirements under Basel III, MaRisk, EBA/CEBS or the Pfandbrief Act which can only be guaranteed by government bonds which are fungible or required by the regulator), the PBB sub-group may, notwithstanding the suspension of the budget financing business, continue to acquire, hold and sell approved securities for management of the cover pools of the PBB sub-group and for liquidity management. This does not include any budget finance business as a strategic business activity.