The guarantee will cover all liabilities with the exception of interbank deposits, subordinated liabilities and collateralised liabilities such as covered bonds which have a maximum maturity of three years.
The Commission approved the Latvian support scheme to stabilise financial markets by providing guarantees to eligible banks to ensure their access to financing.
The guarantee will cover all liabilities with the exception of interbank deposits, subordinated liabilities and collateralised liabilities such as covered bonds which have a maximum maturity of three years. Instruments guaranteed under this scheme may be issued within six months following this decision. Moreover, in exceptional cases only, the Latvian measures also provide for the takeover of distressed banks. In the first instance, the scheme has a ceiling which corresponds to 10% of the Latvian GDP. Only solvent banks are allowed to enter the scheme.
The Commission decision covers a period of six months, following which Latvia should terminate the scheme or re-notify its extension to the Commission.
In particular, the scheme provides for non-discriminatory access as it will be open to all solvent Latvian banks, including Latvian subsidiaries of foreign banks. To benefit from the guarantee, participating banks are required to pay a market-oriented fee, in line with recommendations from the European Central Bank.
Moreover, beneficiaries will be subject to behavioural commitments to avoid an abusive use of the state support. These include limitations on marketing and conditions for staff remuneration or bonus payments.
Press release
© European Commission
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