Brussels, 20th November 2008
State aid: Commission approves Belgian state
guarantee for Fortis Bank
The European Commission has approved, under EC
Treaty state aid rules, the state guarantee mechanism intended to facilitate the
financing of Fortis Bank. The Commission found the aid to be in line with its
Guidance Communication on state aid to overcome the current financial crisis
The aid is necessary to ensure the viability of Fortis Bank and thereby avoid a
serious disturbance in the Belgian economy. The guarantee plan is limited in
time and scope to the minimum necessary to restore the financing, requires an
adequate guarantee fee and provides safeguards to minimise distortions of
competition. It is therefore compatible with Article 87.3.b. of the EC Treaty.
The decision does not cover the measures implemented in favour of Fortis Bank
from 29 September to 6 October 2008 (capital injection and sale to BNP Paribas),
which are assessed separately.
Competition Commissioner Neelie Kroes said: "The state guarantee is necessary
to restore the access of Fortis Bank to short- and medium-term wholesale
funding. At the same time it is ring-fenced to avoid abuses."
On 18 November 2008, the Belgian authorities notified a state guarantee aimed
at tackling the liquidity problems of Fortis Bank, created by the drying up of
the wholesale loans market and aggravated by the distrust in Fortis Bank
resulting from its recent difficulties.
The Commission concluded that the state guarantee mechanism complies with the
conditions laid down in its Communication on state aid for financial
institutions in the context of the current global financial crisis (see IP/08/1495):
- Types of liabilities covered: the guarantee plan covers only short and
medium term wholesale funding. The State support is therefore limited in scope
to what is necessary to allow the bank to regain access to short and medium term
- Limited temporal scope: the time window for issuing new guarantees is
limited to six months. Any prolongation needs to be authorised by the
Commission. This will enable the Commission to verify that the measure is not
maintained if the financial crisis is over;
- Appropriate contribution of the beneficiary: Fortis Bank will pay a
significant guarantee fee, which will increase in proportion to the guaranteed
- No undue distortions of competition: Sufficient behavioural limitations are
in place to prevent abuses. The expansion of Fortis Bank's balance sheet is
capped and it can not advertise the receipt of state guarantees. Predatory
pricing on the retail deposit market is also prohibited.
- An appropriate follow-up: If a guarantee is called, the Belgian authorities
committed to swiftly notify a viability plan to the Commission in line with the
state aid rules for the restructuring of companies in difficulties (see MEMO/04/172).
The non-confidential version of the decision will be made available
under the case number N
574/2008 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