Public guarantee

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Public guarantees are guarantees from local authorities ( federal , state , local ), the institutions or corporations under public law supported by them or guaranteed guarantee banks that are backed by the state . Their contingent liability serves in particular to promote the economy , but also to hedge against risks in the export business .

Legal bases

Most of the time it is a public guarantee, but guarantees or other joint liabilities are also possible. A distinction must be made between the civil law, EU law and municipal law aspects that have to be taken into account in the case of public guarantees.

civil right

Public guarantees are subject to the guarantee law of § § 765 ff. BGB . Like any guarantee, they serve a lender ( credit institution ) as collateral for a bank loan .

Federal guarantees

Export promotion

The most common form of federal liability is in the context of export credit insurance and for direct investments by German companies abroad. In addition, in the new federal states, “large guarantees” of 10 million euros or more, including parallel state guarantees, are issued as part of the federal guarantee program. The federal government has delegated these tasks to Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers Germany , who act as mandataries on behalf of and for the account of the federal government. This federal liability is subject to the subsidiarity principle, since the typical risks of exports / direct investments in countries with difficult economic and / or political situations are not assumed by private export credit insurers. In order to nevertheless enable exports to these regions and to free exporters from the essential risks (political risk and transfer stop risk), the federal government is liable under certain conditions.

Rescue aid

The possible federal / state guarantees for large companies in the crisis such as Opel AG, Arcandor AG (Karstadt / Quelle), Porsche AG or earlier Philipp Holzmann AG are not provided for by law and must therefore be subsumed under the existing regulations . In any case, so-called rescue aid is permitted under EU state aid law. Accordingly, because of the general principle of the prohibition of state aid (Article 107 (1) of the Treaty on the Functioning of the EU ), aid for companies in difficulty should not become the rule. The departure of underperforming companies due to bankruptcy is a normal process on the market. State rescue and restructuring aid could allow firms in difficulty to continue to operate, but this is normally at the expense of competitors. Rescue aid is only permitted if the companies concerned bear a significant part of the restructuring costs themselves. Depending on the size of the beneficiary company, minimum rates are set for its participation in the total restructuring costs: at least 50% for large companies, 40% for medium-sized companies and 25% for small companies. The guidelines therefore apply in particular to large companies operating throughout the European Union. These companies usually have significant market shares and the state aid granted to them has a greater impact on competition and trade. Rescue aid of this type is tied to other conditions - such as being unique for a specific company within 10 years.

Rescue aid, which is also available as state guarantees, presupposes that a company is in difficulty if more than 50% of the book equity and more than 25% of the book equity has been used up within the last 12 months due to losses or the requirements for the application of the bankruptcy proceedings.

State guarantees

Public loan collateral is provided by the federal states if the borrower is creditworthy, the establishment of the respective loan is in the public interest, but the usual bank collateral is not available or is insufficiently available (principle of subsidiarity). The public interest that justifies the assumption of guarantees is determined by the legislature in the respective budget law. So is z. For example, the Thuringian Ministry of Finance has been authorized in the respective budget laws to provide guarantees within a given framework to promote housing construction, agriculture / forestry, the commercial sector, social issues and to secure credit for companies in which the majority of the state is involved. State guarantees mostly serve to secure economically fundable and economically justifiable projects.

Local law

Municipalities are not allowed to provide collateral in favor of third parties (e.g. § 87 Paragraph 1 GemO NRW). This does not apply to the assumption of liability in the context of the fulfillment of municipal tasks, although there is a prior notification obligation (Section 87 (2) GemO NRW) or even an authorization requirement (Section 93 (NiedersGemO)) to the supervisory authority.

Municipalities also have to make a general rule for the assumption of liabilities so that municipal guarantees in the context of de minimis aid can be viewed as not subject to notification. Against this background, not only municipal ad hoc guarantees (guarantees with individual decision-making) and liability obligations in favor of private individuals are relevant under state aid law, but also in individual cases guarantees in favor of economic activity within the meaning of EU law to municipal companies that are in cross-border competition. A so-called communal exemption from liability exists if the credit and the default guarantee that secures it are regulated in a contract. According to the de minimis regulation, municipal ad hoc individual guarantees are regularly regarded as aid and must be notified to the Commission.

A municipal guarantee may only be granted if:

  • it does not cumulatively meet the aid criteria of Art. 87 (1) TFEU,
  • the guarantee falls under an exemption regulation (e.g. de minimis regulation, exemption decision on SGEI),
  • the guarantee has been notified and approved by the EU Commission.

In order not to be classified as an individual guarantee, it is necessary that a general rule for guarantees is also made at the municipal level, which is a de minimis aid within the meaning of “Regulation (EC) No. 1998/2006 of the Commission of December 15 2006 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid ”.

Notification obligation under EU law

If public-law bodies are to act as guarantors or otherwise liable, this must be in accordance with EU state aid law . If a public body assumes liability for a transaction in the non-public sector without adequate consideration, there is a risk that free competition will be endangered, hindered or even eliminated. According to Art. 107 (1) of the TFEU, direct or indirect aid granted from state resources that distorts or threatens to distort competition by favoring certain companies or branches of production is therefore incompatible with the common market insofar as this affects international trade becomes. This includes in particular public funds and the assumption of liability for non-public companies. In addition, the concept of aid under Community law includes any kind of benefit to privately organized and commercially active legal forms that do not provide adequate consideration. In addition to local authorities, municipal companies are also subject to these notification obligations ( Art. 106 TFEU).

According to Article 108 (3) sentence 1 of the TFEU, aid must be notified to the Commission and approved by the Commission under the above conditions before it is granted ( notification obligation ). If this notification obligation is violated, the aid or municipal guarantee is void . The reason for nullity is the violation of a legal prohibition ( § 134 BGB) because the BGH classifies the notification obligation as a prohibition law. In another proceeding, the BGH made it clear that Section 134 of the German Civil Code (BGB) is recognized to apply even if it concerns the violation of a legal prohibition directed only at one state contracting party (Federal Republic of Germany), but the purpose of the law cannot be achieved in any other way than through the cancellation of the private law regulation made by the legal transaction. If there is no such approval in the case of public guarantees that secure loans to borrowers not organized under public law, these guarantees are void and the loans are therefore unsecured (Art. 88 Para. 3 Clause 1 TFEU in conjunction with § 134 BGB). The banks involved are regularly expected to ensure that they are complying with the notification requirement. The banks must recognize the formal illegality of Community law in a failure to report. Community law takes precedence over simple German law.

Only so-called “ de minimis aid ” are exempt from the notification requirement . If the public legal forms have taken on sovereign tasks or if their activity falls into the area of ​​public services , or if there is no freely accessible market for their services, or if a consideration is provided that is customary in the market, then no notification is required either. Notification does not need to be given even if a supported project is strictly communal and does not trigger any clear cross-border demand.

Reason for public guarantees

Public guarantees can be taken over within guarantee programs or as individual guarantees. Guarantee programs are mostly based on state legislation, revolving economic promotions that can be used by healthy companies or start-ups under certain conditions. Public guarantees then serve as a financing instrument in addition to equity , bank loans or leasing for start-ups, restructuring or corporate restructuring . Part of the credit risk with loans to companies is assumed by the public sector in the form of a default guarantee. As a rule, a mandate or an institution involved in the risk (e.g. guarantee banks , house banks ) is involved in the award process. Individual guarantees are usually provided by municipalities, e.g. B. for social or charitable institutions or by the federal government or the states for companies in economic difficulties, but are subject to EU legal notification examination as ad hoc guarantees (exception: rescue aid).

Small and medium-sized companies and start-ups have only very limited financing options and loan collateral on the capital market and are therefore generally at a disadvantage compared to large companies. This competitive disadvantage is to be compensated by guarantee programs.

Mandataries

Mandataries take on the administrative tasks of public guarantees on behalf of and for the account of the responsible government agencies. They check the guarantee applications and manage them on behalf of the public guarantor after they have been awarded. In contrast to the guarantee banks, they are not involved in the risk. The mandate can be a private company (e.g. PricewaterhouseCoopers ) or a public institution (e.g. a development bank ). The Federal Ministry of Economics (BMWI) provides an overview of all guarantee programs, their mandates and contacts in a funding database.

  • Federal mandataries:
    • Foreign business insurance (export guarantees or investment guarantees): Euler Hermes Kreditversicherungs-AG or PricewaterhouseCoopers
    • Federal guarantee program: PricewaterhouseCoopers
  • Mandataries of the countries:

Public Guarantee Programs

In addition to guarantees for foreign business security (better known as Hermes export guarantees or Hermes guarantee ) for foreign trade and direct investments by German companies abroad, public guarantees are issued for investments in Germany via mandataries or guarantee banks. "Small guarantees" - usually up to 1.25 million euros in the Bürgschaftsbank Saxony up to 2 million euros - are of guarantee banks awarded, which the Federal Government and the country -guaranteed be. The state guarantees are usually issued through mandataries and cover guarantee requirements that are higher than the guarantees issued by the state guarantee banks. In addition, in the new federal states, “large guarantees” of 10 million euros or more, including parallel state guarantees, are issued as part of the federal guarantee program .

How a deficiency guarantee works

Requirements of the states and the federal government

When issuing all default guarantees or their counter-guarantees, the federal government and the states assume that the project is economically viable (or serviceability ). In the case of state guarantees and parallel federal / state guarantees, it must also be ascertained that they are economically eligible for funding and that other funding is not possible (BMWI funding database).

functionality

When a (public) default guarantee is issued, a triangular relationship arises between the bank , the borrower and the surety . The guarantee is ancillary and relates to a specific loan agreement between the bank and the borrower. The guarantee does not release the latter from his obligation to repay the loan. Rather, the guarantee serves to hedge the bank's credit risk . The bank alone takes on the money lending (disbursement of the funds) and shares the loan with the surety, depending on the degree of guarantee . As a rule, the degree of guarantee in Germany is up to 80%, which means that at least 20% of the exposure or credit risk remains unsecured with the bank.

For the bank, a public guarantee can reduce the credit risk and thus create incentives to extend further loans to other borrowers. As the default risk of the bank is reduced, it has to deposit less equity in accordance with the equity deposit regulations ( Basel II ) ( core capital ratio ). The risk sharing between the bank and the surety can result in a double check. If the bank and the guarantor have more information together, the information asymmetries and thus the credit rationing can be reduced.

In contrast to the guarantee on first demand , the surety does not pay until the failure is detected. The default payments are usually offset by fees that are due when the guarantee is applied for and during the term and are to be paid by the bank or the borrower. In terms of cash flows , the deficiency guarantee is similar to an insurance company.

From the point of view of the borrower, they can get access to bank loans that they would not get without a guarantee. Depending on how the banks reduce the interest on the basis of the guarantee and how the fees are to be paid, higher financing costs or a reduction in the financing burden may arise. When issuing the guarantees, the borrower usually incurs additional transaction costs .

Type of funding

In general, investment and working capital loans including guarantees are guaranteed. Guarantee banks also guarantee investments by medium-sized investment companies (MBG) in small and medium-sized enterprises according to the EU definition.

Award processes

At guarantee banks

At the guarantee banks there are basically two procedures to guarantee loans to small and medium-sized enterprises : The standard way and the guarantee-without-bank program (BoB). However, the allocation processes vary at the individual guarantee banks in the federal states and individual guarantee banks cooperate with the state development banks (as in Berlin).

In the standard way , the house bank reports to the guarantee bank if it is basically ready to grant a loan but not enough collateral is available. The Guarantee Bank then examines the project independently. When it is ready to issue a guarantee, the application is submitted to the guarantee committee for approval. In addition to the representatives of the guarantee banks, representatives of the banks, chambers of commerce and associations as well as representatives of the state economics and finance ministries, who have a right of veto, sit on this committee. If the guarantee is approved, the contracts can be drawn up and the loan with guarantee granted by the guarantee bank.

With the guarantee-without-bank program , the borrower first applies. The Guarantee Bank examines the application and submits it to the Guarantee Committee. If the guarantee is approved there, the potential borrower receives a certificate with which he can go to a house bank and submit a loan application. As a rule, this procedure is only used for smaller guarantees.

With parallel federal / state guarantees in the new federal states

If the banks apply for a guarantee, they must first justify the necessity in writing, which is checked by the guarantor and the mandate. This is followed by an examination of the economic eligibility by the guarantors and the viability by the mandate. PricewaterhouseCoopers AG is the mandate for this guarantee program.

In the Interministerial Committee (IMA), there is first an internal discussion with representatives of the federal and state economics and finance ministries, as well as representatives of the mandate. Then the representatives of the banks and the company are heard. If a guarantee is granted and the banks agree to the financing, the mandate accompanies the engagement during the term of the guaranteed loan.

With state guarantees

The process of issuing state guarantees is similar in principle to the process for federal guarantees, but varies from state to state in terms of the actors involved. In contrast to the federal guarantees, state-owned banks ( Landesbanken ) sometimes take on mandate activities. Alternatively, the guarantees are issued and administered independently by the ministries. The members of the Interministerial Committee (IMA) vary and, depending on the state, politicians, chambers of industry and commerce, associations and representatives of the banks take part.

Lending

Public guarantees, public default guarantees or public counter-guarantees , as loan collateral, mean that the underlying loans do not have to be backed by the banks' own funds , because they are “zero credit” according to Art. 214 et seq. Capital Adequacy Ordinance (English abbreviation CRR). As a result, these loans have no economic or formal credit risk .

literature

Books

  • Dirk Kramer: Guarantee banks as an instrument to overcome credit rationing in Germany? An empirical study in the states of Brandenburg and Berlin. ibidem-Verlag, Stuttgart 2008, ISBN 978-3-89821-878-8 ( Frankfurter Schriften zu Banking and Finance 7).
  • Richard Flessa: State guarantees and loan guarantee associations. Legal bases, explained for credit institutions, licensing authorities, borrowers and their advisors. Fritz Knapp Verlag Frankfurt am Main 1989, ISBN 3-7819-0430-X .

Essays

  • Association Européenne du Cautionnement Mutuel: Guaranteeing loans for small and medium-sized enterprises. Sharing credit risk, an incentive for investment and growth ... The guarantee schemes members of the European Mutual Guarantee Association. Presentation and comparison. AECM, Brussels 2006 ( online (PDF; 2.34 MB) ).
  • Jochen Bigus, Thomas Langer, Dirk Schiereck : Why is there loan collateral? In: Credit and Capital . 4, 2005, pp. 573-617.
  • Heinz-Günter Geis: Loan Guarantee Fund in Development Cooperation. Brief report on behalf of the Federal Ministry for Economic Cooperation (BMZ). Free University of Berlin - Institute for Banking and Finance, Berlin 1993 ( Institute for Banking and Finance - Reports and Materials 15, ZDB -ID 2369118-9 ).
  • Ljuba Kokalj, Guido Paffenholz, Petra Moog: New Trends in SME Financing . Deutscher Universitäts-Verlag, Wiesbaden 2003, ISBN 3-8244-7904-4 ( Gabler Edition Wissenschaft - Schriften zur Mittelstandsforschung NF 99).

Web links

Individual evidence

  1. ↑ "Community guidelines on state aid for rescuing and restructuring firms in difficulty", (OJ EU No. C 244 of October 1, 2004, p. 2 ff.)
  2. ↑ A company is in difficulty if it is unable to “absorb losses that force the company in the short or medium term with its own financial resources or borrowings made available to it by its owners / shareholders or creditors will stop its activities if the state does not intervene. "
  3. ↑ cf. For example the guideline of the Saxon State Ministry for Economic Affairs and Labor on the granting of grants for the rescue and restructuring of small and medium-sized enterprises in the Free State of Saxony from November 1, 2005 (Saxon Official Gazette p. 1105)
  4. ↑ cf. Section 3.3 of the Saxon Directive
  5. ↑ OJ. EU No. L 379 of December 28, 2006, p. 5 ff.
  6. ↑ BGH WM 2004, 468
  7. ^ BGH WM 2003, 1491
  8. ↑ BGH WM 2004, 468
  9. ↑ cf. ECJ, judgment of March 20, 1997, Az .: Rs C-24/95; BVerwGE 92, 81, 86 from 1993
  10. ↑ BVerwGE 92, 81, 86 from 1993.
  11. ↑ cf. BVerfGE 75, 223, 244 from 1987
  12. ↑ Klaus Nathusius, Basics of Start-up Financing, 2001, p. 127ff.
  13. ↑ Ulrich Hommel, Thomas C. Knecht, Holger Wohlenberg, Handbuch Unternehmensreststrukturierung, 2006, p. 1017 ff.
  14. ↑ Source: Funding database of the BMWI
  15. ^ Guarantee bank Saxony: Guarantee. Retrieved July 25, 2018 .