Commission clears extension of bank support measures in Portugal and Spain
23 July 2010
A majority of support schemes for financial institutions put in place in 2008 and 2009 to ensure financial stability have been periodically extended, generally for six months, when requested by the Member States concerned and justified.
The European Commission has extended until 31 December 2010 its authorisation under EU state aid rules of the Portuguese bank guarantee and bank recapitalisation schemes, and of the Spanish recapitalisation measures in favour of the banking sector. The extended Portuguese guarantee scheme requires 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 Commission has already extended its authorisation of bank guarantee schemes in Sweden, Germany, Austria, Latvia, Ireland, Spain, Denmark, The Netherlands, Slovenia, Greece and Poland under the same conditions.
Portuguese Guarantee Scheme
The Commission has authorised the extension of the Portuguese guarantee scheme until 31 December 2010. The scheme was initially approved on 29 October 2008 and prolonged on 22 February 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 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.
Portuguese recapitalisation scheme
The Commission has authorised the extension until 31 December 2010 of the Portuguese recapitalisation scheme for credit institutions. The scheme was initially approved on 20 May 2009 and extended on 17 March 2010.
The Commission found the extension of the measure to be in line with its guidance on support measures for banks during the financial crisis.
Spanish recapitalisation scheme
The Commission has authorised the extension until 31 December 2010 of the Spanish recapitalisation measures in favour of the banking sector. The scheme, known as ´FROB´, was initially approved on 28 January 2010 and expired on 30 June 2010. The scheme has been amended so as to permit individual recapitalisations.
The Commission found the extension of the measure to be in line with its guidance on support measures for banks during the financial crisis.
On 28 June 2010, the Commission has already authorised the extension until 31 December 2010 of the Spanish guarantee scheme.
© European Commission
