Original Disposal Frameworks and Current Instruments of the FMS

Recapitalisations of existing participations (section 7 StFG) and winding-up agencies /section 8a StFG)up to € 80 bnup to € 40 bn1
Guarantees for liabilities (section 6 StFG)up to € 400 bnexpired
Refinancing of deconsolidated environment (section  8a Abs. 10 StFG)up to € 30 bnup to € 60 bn

1 New measures can no longer be applied for.


Section 6 StFG

The FMS was authorised to provide guarantees of up to € 400 bn for debt instruments issued from the date of entry into force until 31 December 2015 and justified liabilities of companies in the financial sector in order to remedy liquidity bottlenecks and support their refinancing on the capital market. The term of the guarantees and the liabilities to be covered was initially limited to three years and was increased to a maximum of five years in 2009. A prerequisite for the granting of a guarantee was, in particular, adequate capital resources (see section 2 FMStFV). 
For assuming the guarantees, the companies had to pay the FMS a remuneration in line with the market, the amount of which depended on the respective default risk. A commitment fee was initially due for the provision of a guarantee facility. If concrete guarantees for liabilities were issued from it, a significantly higher guarantee commission had to be paid for it. During the term of the guarantees, the companies had to fulfil the conditions laid down in the FMStFV, e.g. a sound and prudent business policy or the granting of appropriate contractual information rights vis-à-vis the FMS (see section 5 FMStFV). 
The instrument of guarantees has no longer been available since 31 December 2015.


Section 7 StFG

The FMS could participate in the recapitalisation of companies in the financial sector, i.e. in particular acquire company shares (stocks) or silent participations. Participation by the FMS should only take place if there is an important interest of the Federal government and the purpose sought by the Federal government cannot be achieved better and more economically by other means. The FMS is exempt from the usual requirements for federal participations (sections 65 to 69 of the Federal budget code), as these would contradict the goal of financial market stabilisation. In order to receive recapitalisation, the companies had to demonstrate a long-term viable business model or present a comprehensible restructuring plan on how such a model would be achieved again. 
For the granting of these capital aids, the companies were required to pay a remuneration in line with the market. Until the full repayment of the funds, the companies must fulfil the conditions laid down in the FMStFV, e.g. a sustainable business policy, restrictions on the remuneration system or the granting of appropriate contractual information rights vis-à-vis the FMS (see section 5 FMStFV).
The instrument of recapitalisations has no longer been available since 31 December 2015. Since 1 January 2016, measures are only possible for participations already existing as of 31 December 2015.

Assumption of Risk

Section 8 StFG

The FMS was able to acquire or otherwise hedge risk positions (in particular receivables, securities, derivative financial instruments, rights and obligations arising from loan commitments or guarantees and participations) acquired from financial sector enterprises before 1 June 2014, in each case together with the associated collateral. The same applied to special purpose entities that assumed risk positions of a company in the financial sector. The risk assumptions were structured in such a way that the beneficiary company did not have to continue to account for the risk positions in question.
The prerequisite for risk assumptions was an adequate equity capitalisation of the beneficiary company (see section 4 FMStFV). 
The FMS could agree on a pre-emptive and repurchase right in favour of and a repurchase obligation at the expense of the beneficiary company. The beneficiary enterprise could be obliged to make a compensatory payment if the FMS had suffered a default at maturity or realisation of the risk position.
When granting a risk assumption, the FMS was required to demand a remuneration in line with the market from the companies for this. 
The instrument of risk assumption has no longer been available since 31 December 2015.

Establishment of Deconsolidated Environment

Section 8A StFG

The establishment of deconsolidated environment institutions under Federal law was made possible by the amendments to the Financial Market Stabilisation Development Act (FStFEntwG) in July 2009.

Companies in the financial sector were able to transfer acquired risk positions and entire business divisions on this basis until 31 May 2014 if they were no longer necessary for the future corporate strategy. This transfer was intended to free the companies from legacy burdens in order to be able to develop a sustainable business model for the remaining parts of the company. However, the previous owners of the bank remain economically responsible for the deconsolidated environment, i.e. they must be liable for and compensate for any losses that occur in the future. 

The instrument of establishing deconsolidated environment has no longer been available since 31 December 2015. Since 1 January 2016, only refillings of the two Federal winding-up agencies existing on 31 December 2015 are possible.

The Federal Agency for Financial Market Stabilisation (Bundesanstalt für Finanzmarktstabilisierung, FMSA) is responsible for the extended supervision of the deconsolidated environment under Federal law.

Refinancing of Deconsolidated Environment

Section 8a para. 10 StFG

Since 01 January 2019, the FMS has a separate credit authorisation for the purpose of granting loans to the FMS Wertmanagement AöR. This refinancing via the FMS replaces the EAA's independent refinancing activities on the euro capital market and leads to lower costs for the FMS Wertmanagement AöR due to the better refinancing conditions of the FMS. For the FMS, this is neutral in terms of earnings, as the loans are passed on at the same conditions that the FMS itself pays for its refinancing. Nevertheless, the FMS benefits from the lower refinancing costs in the future through its loss compensation obligation to the FMS Wertmanagement AöR.

Federal Agency for Financial Market Stabilisation

The Federal Agency for Financial Market Stabilisation (FMSA) exercises legal supervision over the deconsolidated environment FMS Wertmanagement (FMS-WM) and Erste Abwicklungsanstalt (EAA). Again, it is itself subject to the legal and technical supervision of the Federal Ministry of Finance. Since 1 January 2018, the FMS has been managed by the Federal Republic of Germany - Finance Agency.


FMS Wertmanagement AöR

FMS Wertmanagement was established in 2010 as a federally owned deconsolidated environment for the nationalized Hypo Real Estate Holding AG (HRE Group) with the aim of taking over and winding up risk positions and non-strategic business areas from the HRE Group.