Brussels, 30th October 2008
The European Commission has approved under EC Treaty state aid rules a Swedish rescue package to stabilise financial markets by providing guarantees to eligible financial institutions. The Commission found the scheme to be in line with its Guidance Communication on state aid to overcome the financial crisis (see IP/08/1495). In particular, the beneficiaries will pay an adequate remuneration for the guarantee, which is available on a non-discriminatory basis, is limited in time and scope and contains behavioural safeguards to avoid abuses. The Commission therefore concluded that the package was an adequate means to remedy a serious disturbance of the Swedish economy and as such is in line with Article 87.3.b of the EC Treaty.
Competition Commissioner Neelie Kroes said: "This decisions shows that when Member States follow the Commission's guidance on overcoming the financial crisis, they can obtain rapid approval. The Swedish measures were well-designed and needed little alteration to take full account of the state aid rules' requirements that such schemes are non-discriminatory and minimise potential distortions of competition. We have therefore been able to approve the scheme very quickly after notification".
On 27 October 2008, Sweden notified a package of measures, aimed at restoring investor confidence in the financial markets and at stimulating inter-bank lending, to the Commission.
The package consists of a guarantee scheme covering new issuances of short and medium term non-subordinated debt, to support solvent banks and mortgage institutions that have difficulties in accessing financing. The total amount of debt to be covered is capped at SEK 1,500 billion (approximately €150 billion) and concerns instruments with a maturity of maximum three years, or exceptionally five years for covered bonds only. Debt covered by the guarantee will be accepted by the Swedish Central Bank as equivalent to government bonds.
The package comprises elements of state aid but contains several provisions aimed at ensuring its adequacy and proportionality under the EU state aid rules, in accordance with the Commission's guidance document (see IP/08/1495).
In particular, the scheme provides for non-discriminatory access, as it will be open to all solvent banks and mortgage institutions incorporated and operating in Sweden. The guarantee will be remunerated by a market-oriented fee in line with the recommendations from the European Central Bank. Moreover, a series of behavioural commitments will be imposed on the beneficiaries. These include a limit on aggregate growth in balance sheet volume related to the guarantee, to be monitored by the Swedish Financial Supervisory Authority, marketing restrictions, a prohibition to base significant expansion on the guarantee and restrictions related to staff remuneration. The period during which the guarantee can be drawn is restricted to less than six months, until 30 April 2009. This will limit the amount of debt that can be issued under the guarantee.
The Commission concluded that the package would constitute an appropriate and proportionate means to restore confidence in the Swedish financial market and to stimulate inter-bank lending. The strict conditions attached to the grant of any guarantee will ensure that the state support is limited to what is necessary for the recovery of the Swedish financial system.
The non-confidential version of the decision will be made available under the case number N 533/2008 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.