The European Commission has extended its authorisation under EU state aid rules until 31 December 2010 of the Dutch and Slovenian bank guarantee schemes and the Greek and Polish bank support measures.
The extended schemes require the banks to pay higher premiums for the guarantees granted by the State. This is to encourage banks to finance themselves without state support and to limit distortions of competition. The vast majority of the bank support schemes put in place in 2008 and 2009 to ensure financial stability expire this month. In agreement with EU Finance Ministers, the extension of guarantee schemes is subject to higher fees paid to the government and, for banks that continue to rely heavily on those guarantees, to a viability review. The Commission has already extended under these conditions its authorisation of bank guarantee schemes in Sweden, Germany, Austria, Latvia, Ireland, Spain and Denmark. The extensions are for six months, until the end of 2010.
Dutch Guarantee Scheme
The Commission has authorised the extension of the Dutch Guarantee Scheme until 31 December 2010. The scheme was initially approved on 30 October 2008 and amended on 7 July 2009 and 17 December 2010.
The Commission considers the scheme to be in line with its guidance on state aid to banks during the crisis and the recent adjustment of the rules for State guarantees, endorsed by the conclusions of the 18 May 2010 EU Council of Economic and Financial Affairs Ministers on the phasing out of support measures for the financial sector.
The extended guarantee scheme is well targeted, proportionate and limited in time and scope. It also includes higher premiums for state guarantees, thereby incentivising banks to refinance themselves on the markets without state support and limiting undue distortions of competition. The Commission has therefore concluded that the extended measures are compatible with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), that allows aid to remedy a serious disturbance in the economy of a Member State.
Slovenian guarantee scheme
The Commission has authorised the extension until 31 December 2010 of the Slovenian guarantee scheme for credit institutions. The scheme was initially approved on 12 December 2008 and extended on 22 June 2009 and 17 December 2009.
Like the Dutch scheme, the Slovenian scheme is well targeted, proportionate, limited in time and scope and includes higher premiums for the fee paid to the government.
Greek support package for credit institutions
The Commission has also authorised the extension until 31 December 2010 of the Greek support package for credit institutions. The support measures consist of a recapitalisation scheme, a guarantee scheme and a bond loan scheme, initially approved on 19 November 2008 and extended on 18 September 2009 and 25 January 2010.
Polish support scheme for financial institutions
Finally, the Commission has authorised the extension until 31 December 2010 of the Polish bank support scheme for financial institutions. This scheme foresees two categories of support measures, State Treasury guarantees for the issuance of new senior debt by banks and liquidity support measures in the form of Treasury bonds, either as a loan or to be sold with deferred payment. The scheme was initially approved on 25 September 2009 and extended on 9 February 2010.
Like the Greek schemes, the extended measures are well targeted, proportionate and limited in time and scope and the extended guarantee includes higher premiums.
Background
The vast majority of support schemes for financial institutions, put in place in 2008 and 2009 to ensure financial stability, expire at the end of June 2010. They have been periodically extended, generally for six months, when requested by the Member States concerned and justified.
The Commission has already approved, also for six months, the prolongation of schemes in Sweden (guarantee scheme), Germany (guarantees, recapitalisation and other measures) and Hungary (recapitalisation scheme), Austria (guarantee and recapitalisation scheme) and Latvia (guarantee scheme), Ireland (guarantee scheme), Spain (guarantee scheme), Denmark (guarantee scheme on new debt) and Hungary (liquidity scheme).
