State aid: Commission approves Slovenian liquidity scheme for financial sector
European Commission - IP/09/452 20/03/2009
Brussels, 20th March 2009
The European Commission has approved, under EC Treaty state aid rules, a Slovenian support scheme to stabilise financial markets by providing state loans to eligible financial institutions to ensure their access to financing. The Commission found the measure to be in line with its October 2008 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.
Competition Commissioner Neelie Kroes said: "The Slovenian liquidity scheme complements the guarantee scheme already in place. It will ensure that financial institutions in Slovenia have adequate access to refinancing while limiting distortions of competition."
The objective of the liquidity scheme is to provide short and medium term financing to the credit institutions which are unable to obtain funds on the financial markets under the previously approved Slovenian guarantee scheme (see IP/08/1964) and to other financial institutions.
The Slovenian state will provide against remuneration short and medium term non-subordinated debt for a duration of one to a maximum of three years. The overall budget of the previously approved guarantee scheme (see IP/08/1964) and the present liquidity scheme is capped at €12 billion. Only solvent credit institutions, insurance, reinsurance, and pension companies are allowed to enter the scheme. The Commission decision covers a period of six months, following which Slovenia will either terminate the scheme or renotify its extension to the Commission for further assessment.
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 Guidance Communication (see IP/08/1495).
In particular, the scheme provides for non-discriminatory access as it will be open to all solvent financial institutions in Slovenia. To benefit from the state loans, participating financial institutions 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 state loans. 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 637/2008 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.