Brussels, 21 st December 2009
The European Commission has approved, under EU state aid rules, a Polish scheme aimed at maintaining stability in the Polish financial sector by underwriting capital increases to eligible financial institutions. This scheme complements the liquidity support granted under the support scheme for banks' funding in Poland (see ). The Commission found the recapitalisation 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 scheme is limited in time and scope, requires market oriented remuneration and contains sufficient safeguards to avoid abuses. The Commission therefore concluded that the scheme is an adequate measure to remedy a serious disturbance of the Polish economy and is as such compatible with Article 107.3.b of the Treaty on the Functioning of the EU (TFEU).
Competition Commissioner Neelie Kroes said: "The Polish bank recapitalisation scheme will limit the adverse impact of the current crisis on the financial system in Poland, while at the same time establishing clear safeguards to limit distortions of competition."
In order to strengthen financial stability, Poland offers to underwrite, in the form of preferential shares or subordinated debt instruments, up to 100% of capital increases of financial institutions that are unable to obtain the required financing from the market.
The scheme is open to all banks or insurance companies established in Poland (whether Polish or foreign-owned) and applies to both financially sound and distressed financial institutions.
The Commission's examination found that the capital injections are priced adequately. The annual interest rate to be paid on subordinated debt amounts to 10% or more. The return on shares will increase over time due to the preferential dividend paid to the state and the step-up clause. The increasing remuneration provides strong incentives for beneficiaries to redeem the state's investment as soon as market conditions permit. The scheme also incorporates additional safeguards, including a ban on dividends and a restrictive policy on coupon payments on hybrid capital for financial institutions in distress.
The non-confidential version of the decision will be made available under the case number N 302/2009 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 .