Commission Vice-President in charge of competition policy Joaquín Almunia said: "After almost two years of a specific crisis state aid regime, we need to prepare a gradual return to normal market functioning. Of course, the remaining risk of renewed stress is a valid reason to proceed with care and caution in the exit process."
The European economy is at a crucial juncture. Although the situation in the financial markets remains fragile, the recovery is taking hold which calls for a cautious and progressive withdrawal of the state aid crisis framework and the exceptional levels of state support. A gradual phasing out of the support will encourage the restructuring of banks and of firms with structural difficulties creating the conditions for a normalisation of the credit conditions and a firming of the recovery process.
The Commission has agreed to prolong into 2011 the crisis-related state aid measures that enable Member States to support their financial sector as well as temporary framework to ease companies' access to finance. These special rules were introduced at the end of 2008/beginning of 2009 in the wake of the financial crisis caused by the collapse of Lehman Brothers. Article 107(3)(b) of the EU Treaty allows the granting of state support to remedy a serious disturbance in the economy of Member States.
The Commission believes there are still grounds to deem the requirements for the application of Article 107(3)(b) fulfilled. But the continued punctual availability of specific crisis aid measures must go hand in hand with a gradual disengagement from the temporary extraordinary support.
For the financial sector, this approach has already started with the tightening of conditions for new government guarantees from July 2010 through a fee increase and a closer scrutiny of the viability of heavy guarantee users. The new Communication requires that, as of 1st January 2011, every bank in the EU having recourse to state support in the form of capital or impaired asset measures will have to submit a restructuring plan. Until now this was limited to distressed banks, i.e. banks that, in particular, received support above 2% of their risk-weighed assets. This a new Communication complements the guidance on the assessment of state aid for banks provided in 2008/early 2009.
The prolonged temporary framework will maintain some measures facilitating the access to finance, especially for SMEs, i.e. subsidised state guarantees and subsidised loans, inter alia for green products. In these areas, the market is not yet able to entirely meet small companies' financing needs. The introduction of stricter conditions for those measures will facilitate a gradual return to normal state aid rules while limiting the impact of their prolonged application on competition. This includes that, from now on, for large firms working capital loans are excluded from the application of the temporary framework and that firms in difficulty can no longer benefit from the framework.
The Commission has also agreed modified Risk Capital Guidelines having concluded that one of the measures introduced during the crisis should be made permanent. This concerns the increase from €1,5 million to €2,5 million of the maximum equity or other finance that a Member State can invest in a start up company. This is because private equity investors have moved towards less risky investment during the crisis making difficult access to finance for start ups especially at their early stages. The adapted guidelines will expire as planned at the end of 2013.
Finally, as companies still have difficulties in finding adequate trade insurance coverage from private insurers in many sectors and Member States, the Commission also extends the procedural simplifications on short-term export credit insurance that were introduced by the temporary framework. This is valid until end 2011. At the same time the Commission prolongs the validity of its 1997 Communication on short-term export credit until 31 December 2012.
© European Commission
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