State aid: Commission authorises support package for Greek credit institutions
European Commission - IP/08/1742 19/11/2008
Brussels, 19th November 2008
The European Commission has approved under EC Treaty state aid rules a Greek package intended to stabilise the markets as a response to the global financial crisis. The package would provide eligible credit institutions with new capital and securities which can be converted into liquidity with the ECB. It also includes guarantees on short and medium term newly issued debt, under strict conditions. The Commission found the measures to be in line with its guidance Communication on state aid to overcome the financial crisis (see IP/08/1495). In particular, the package ensures non discriminatory access, is limited in time and scope, provides for market-oriented remuneration and foresees adequate safeguards to minimise potential distortions of competition. The Commission therefore concluded that the scheme was an adequate means to remedy a serious disturbance in the Greek economy and as such compatible with Article 87.3.b of the EC Treaty.
Competition Commissioner Neelie Kroes said: "As the previous schemes, we have been able to approve the Greek package in a relatively short time. Nevertheless intense discussions took place in order to align the conditions of the package on our framework for assessment. This is not only a success for Greece but demonstrates the Commission's role in the state aid field: to maintain a level playing field throughout Europe, despite the crisis."
After preliminary exchanges with the Commission, the Greek authorities notified on 14 November 2008 a package of measures designed to stabilise the financial markets. The package consists of:
The Commission concluded that the scheme was an appropriate, proportionate and necessary means to maintain confidence in the Greek credit institutions' creditworthiness and to stimulate again interbank lending. This is also true for the third measure which will provide liquidity and is as such unprecedented. The Commission notes also that this liquidity shall be used for granting residential loans and loans to small and medium-sized enterprises under competitive terms.
In particular, the scheme provides for non-discriminatory access, as it is open to all credit institutions licensed in Greece. It is limited in time and scope, with entry windows of maximum six months and budget caps. It requires beneficiaries to pay a market-oriented remuneration. The measures target only financially sound companies; the provision of guarantees and capital and bond allocations are based on solvency and capital ratio requirements.
Moreover, several behavioural safeguards are in place, to avoid an abusive use of the state support. These include growth restrictions based on clear benchmarks imposed on all participating banks and limitations to manager remuneration while the support measures are in place. Finally, Greece has committed to notify restructuring or liquidation plans for companies that have either failed under the guarantee or the securities scheme or benefited from the recapitalisation scheme.
The non-confidential version of the decision will be made available under the case number N560/2008 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.