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Brussels, 8 th December 2009

State aid: Commission approves Slovak bank support scheme

The European Commission has approved, under the Treaty on the Functioning of the EU state aid rules, a Slovak scheme aimed at maintaining stability in the Slovak banking sector by providing capital injections and guarantees to eligible financial institutions. After intensive exchanges with the Slovak authorities, the Commission found the scheme to be in line with its Guidance Communications on state aid to overcome the financial crisis (see IP/08/1495 and IP/08/1901 ). In particular, the measures provide for non-discriminatory access, are limited in time and scope, require market oriented remuneration and contain sufficient safeguards to avoid abuses. The Commission therefore concluded that the package was an adequate means to remedy a serious disturbance of the Slovak economy and is as such compatible with Article 107.3.b of the Treaty on the Functioning of the EU.

Competition Commissioner Neelie Kroes said: "The Slovak bank support scheme should contribute to limiting the adverse impact of the current crisis on the banking system and on the real economy in Slovakia. Based on a close cooperation between the Commission and the Slovak authorities we are now satisfied that the scheme will not unduly distort competition in the internal market."

The measures

In order to counteract ongoing turbulence on financial markets, Slovakia intends to provide a package of measures to maintain the stability of the domestic financial system and to mitigate the spill-over of the global financial crisis from the banking sector to the real economy. The package consists of two different measures: capital injections and guarantees.

The potential beneficiaries of the aid are systemically relevant banks incorporated in Slovakia, including subsidiaries of foreign financial institutions.

Appropriate means

The Commission found that the scheme will contribute to maintaining the stability of the financial system in Slovakia. The measures are well-designed and provide safeguards to prevent the aid from being misused. For example, the bank cannot advertise the state support; there will be dividend bans, and management remuneration reductions.

The capital injections and guarantees are priced adequately. The remuneration for capital injections increases over time. This is an incentive for banks to reimburse the capital to the state as soon as possible.

Slovakia committed to implement state capital contributions and state guarantee measures only during a period of maximum six months after approval of the scheme by the Commission. Slovakia also committed to report to the Commission on the implementation of the scheme every six months.

The non-confidential version of the decision will be made available under the case number N 392/2009 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 .

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