Amane Ishida

<p>In this article, it is argued that, according to requests by EU private banks, the Directorate General for Competition (DG COMP) abolished guarantees for public banks in EU Member States.</p><p>The EU financial integration was developed in the 1980s single market program, however, there were loopholes in the financial integration. For example, aid to public banks was rarely questioned in the 1980s single market program. Therefore, EU Member States were able to protect domestic public banks by giving guarantees. In the 2000s the guarantees were abolished by the DG COMP. However, little attention was paid to the role of EU private banks at the time of the abolishment.</p><p>At the end of 1991, the Land of North Rhine-Westphalia decided to transfer the Housing Promotion Institute (WFA) to WestLB for a consideration of 0.6 per annum. In 1994, a complaint was lodged against the transfer by the Federal Association of German Banks. German private banks took the view that the low price paid constituted state aid that distorted competition. This started a dispute over the guarantees for public banks in Germany. On 21 December 1999, the European Banking Federation (EBF) filed a complaint against Anstaltslast and Gewährträgerhaftung, the two guarantee instruments traditionally used in the German public banks. According to the EBF's request, the DG COMP has requested the German authorities to bring State guarantees for public banks into line with the State aid rules of the EC Treaty. At first, German authorities and public banks resisted against the DG COMP's request, but soon after agreed on the request. These were followed by the abolishment of similar guarantees in Austria and France.</p><p>Therefore, according to the request by EU private banks, the DG COMP abolished the guarantees for public banks in EU Member States.</p>