State aid: Investigation into the recapitalisation of Sjóvá insurance company in Iceland
Following a series of transactions, the Icelandic state acquired 73 percent of the shares of Sjóvá in May 2010. The shares were paid for with government owned bonds worth ISK 11.6 billion.
The bonds were initially sold to Sjóvá's holding company in July 2009. They were used in the recapitalization of Sjóvá, a measure needed to keep the insurer in business. The holding company was given up to 18 months to pay the state for these bonds and no interest was set for this period. Alternatively, Sjóvá's holding company could at any point decide to pay the state with Sjóvá shares, an option it actually used in May 2010.
It appears to the Authority that the Icelandic state through this deal took a leading role in the bailing out of the failed insurance company. Regrettably, it did so without notifying the Authority.
To date, the Icelandic authorities have argued that the state acted on purely commercial basis and that no notification was needed. The Authority, however, has doubts as to whether a private market investor would have entered a deal of this kind in July 2009. The Authority first followed the matter on its own initiative after media reports, but later also received a complaint from a competitor.
In its formal investigation opened today, the Authority will examine further whether the investment involved state aid. If so, the Authority will assess whether such aid is compatible with the EEA Agreement.
“This will require information from the state that the rescue aid was necessary to prevent a serious disturbance in the Icelandic economy,” says Per Sanderud, President of the EFTA Surveillance Authority.
The Authority will now call for further comments from the Icelandic authorities and from third parties with an interest in the case.
A non-confidential version of the Authority's Decision to open formal investigation will shortly be published on the Authority's website and in the Official Journal of the European Union.
For further information, please contact:
Mr. Trygve Mellvang-Berg
Press & Information Officer
tel. (+32)(0)2 286 1866
mob: (+32)(0)492 900 187
Mr. Per Andreas Bjørgan.
Competition and State Aid
tel. (+32)(0)2 286 18 36
mob: (+32)(0)477 263 027