29 January 2009

Commission authorises modification of French scheme to inject capital into certain credit institutions

The modification gives banks the option to use preference shares instead of subordinated debt securities for their recapitalisation by the State. Banks will also be able to convert subordinated debt securities already issued into preference shares.

The Commission approved the modification of the French scheme to inject capital into credit institutions. The change to the scheme essentially entails giving banks the option to use preference shares instead of subordinated debt securities for their recapitalisation by the State. Banks will also be able to convert subordinated debt securities already issued into preference shares.

 

The Commission has also approved an increase in the budget for the second recapitalisation tranche, which is to go up from EUR 10.5 billion to EUR 11 billion, and an extension of the scheme to 31 August 2009.

 

The second capital-injection tranche will be apportioned among the beneficiary banks according to the method already used for the first operation. However, the French authorities have increased the amount of the second tranche to take account of the merger of the central bodies of the Caisses d’Épargne and the Banques Populaires within the limit of 50 basis points of the Tier 1 ratio of the new entity. This adjustment represents an addition of EUR 500 million (maximum) to the EUR 10.5 billion initially earmarked for the second tranche.

 

Press release

 

© European Commission