State aid: Commission approves revised Irish support scheme for financial institutions
European Commission - IP/08/1497 13/10/2008
Brussels, 13th October 2008
The European Commission has approved under EC Treaty state aid rules an Irish scheme intended to stabilise the financial markets by providing guarantees on deposits and debt to eligible banks active on the Irish market. After intensive contacts with the Commission, the Irish authorities submitted the finalised scheme on 12th October, addressing issues raised in the discussions (see MEMO/08/615). The Commission found the revised scheme to be compatible with EU state aid rules, because it was an appropriate means to remedy a serious disturbance in the Irish economy (Article 87.3.b of the EC Treaty), while avoiding unnecessary distortions of competition. In particular, it now provides for non-discriminatory access to banks with systemic relevance for the Irish economy, regardless of their origin, fair remuneration of the guarantee, is limited in time and contains appropriate safeguards to avoid abuses. The Irish measures are therefore now in line with the guidance just issued by the Commission (see IP/08/1495).
Competition Commissioner Neelie Kroes said: "This case illustrates how we can work together with Member States to design measures that help to solve the financial crisis while avoiding negative effects on other Member States' banks. I am very pleased with the constructive attitude of the Irish authorities".
On 3rd October, the Irish authorities informed the Commission about a planned support scheme consisting of a state guarantee over current and future liabilities of certain banks operating on the Irish market. After constructive contacts, the Irish authorities were able to submit the finalised scheme, taking into account Single Market aspects discussed with the Commission, only one week later, on 12th October 2008 (see MEMO/08/615).
The Commission found that the revised scheme constituted an adequate means to restore confidence in the financial markets and overcome a market failure for wholesale funding that affects even healthy banks. The Commission also found that the revised scheme addressed issues that had been raised by the Commission relating to maintaining the integrity of the Single Market in financial services and compliance with EU state aid principles, in particular as regards:
On this basis the Commission found the revised package proportionate and equipped with sufficient safeguards to limit distortions of competition with other banks and to avoid negative spillovers in other Member States, while minimising aid from public funds.
The non-confidential version of the decisions will be made available under the case number NN 48/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.