Commission approves Spanish guarantee scheme for credit institutions

23 December 2008

The state guarantee would cover, against remuneration, the issuance of notes, bonds and obligations admitted to the official secondary market in Spain.

The Commission approved the Spanish scheme to support the financial sector by providing guarantees to eligible financial institutions.

 

The state guarantee would cover, against remuneration, the issuance of notes, bonds and obligations admitted to the official secondary market in Spain. While the maturity of the financial instruments covered would be in principle between three months and three years, guarantees could be extended to instruments with a maturity of up to five years in exceptional circumstances. The scheme's overall budget is capped at €100 billion, which can be increased to €200 billion, if the market conditions request it. Only solvent banks have access to the guarantee scheme. The Commission decision covers a period of six months following to which Spain 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 Spanish credit institutions having a share of at least 1/1000 of the credit market, in as much as the guaranteed instruments have been issued during the past five years. The guarantee is limited in time and scope, as both its global budget and individual guarantees are capped. 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 a series of behavioural commitments, to avoid an abusive use of the state support. These include restrictions on expansion and marketing.

 

Press release

 

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