Brussels, 12th December 2008
The European Commission has approved under EC Treaty state aid rules a Slovenian support scheme to stabilise financial markets by providing guarantees to eligible credit institutions to ensure their access to financing. The Commission found the measure to be in line with its Guidance Communication on state aid to overcome the financial crisis (see IP/08/1495). In particular, the scheme is non-discriminatory, limited in time and scope, provides for behavioural constraints to avoid abuses and is subject to a market-oriented remuneration from the beneficiaries. The Commission therefore concluded that the scheme was an adequate means to remedy a serious disturbance of the Slovenian economy and as such in line with Article 87.3.b of the EC Treaty.
"I am satisfied that after extensive contacts with the Slovenian authorities this bank support scheme strikes the right balance between ensuring that banks in Slovenia will have access to financing and making sure the beneficiaries do not enjoy an unfair competitive advantage", commented Competition Commissioner Neelie Kroes.
The state guarantee would cover, against remuneration, the issuance of new short and medium term non-subordinated debt with a maturity between 90 days and five years. The scheme's overall budget is capped at €12 billion. Only solvent banks are allowed to enter the scheme. The Commission decision covers a period of six months, following which Slovenia should terminate the scheme or renotify its extension to the Commission.
The scheme contains elements of state aid but foresees safeguards aimed at ensuring that the state intervention is proportionate, limited to what is necessary to stimulate interbank lending and adequate to reach this goal, in accordance with EU state aid rules, as outlined in the Commission's 13th October guidance document (see IP/08/1495).
In particular, the scheme provides for non-discriminatory access as it will be open to all solvent Slovenian credit institutions, including Slovenian subsidiaries of foreign banks. To benefit from the guarantee, participating banks are required to pay a market-oriented fee, in line with recommendations from the European Central Bank.
Moreover, beneficiaries will be subject to behavioural commitments to avoid an abusive use of the state support. These include limitations on expansion and marketing and conditions for staff remuneration or bonus payments. In addition, Slovenia committed to notify restructuring or liquidation plans for each beneficiary that defaulted on its liabilities and as a consequence would cause the guarantee to be called upon. Finally, Slovenia will report periodically to the Commission on the implementation of the scheme.
In light of these commitments and conditions, the Commission concluded that the scheme would be an adequate means to restore confidence on Slovenian financial markets and to boost interbank lending. The safeguards will ensure that the state support is limited to what is necessary to stabilise the Slovenian financial sector and that negative spill-over effects are minimised.
The non-confidential version of the decision will be made available under the case number N 531/2008 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.