Brussels, 20 th May 2009
State aid: Commission approves Danish rescue aid for Fionia Bank
The European Commission has approved, under EC Treaty state aid rules, rescue aid that the Danish authorities have granted to Fionia Bank. The aid is in the form of a credit facility of up to €685 million (DKK 5.1 billion) and a €134 million (DKK 1 billion) capital injection to bring the level of solvency up to a constant 11.5%. The measure constitutes an adequate means to remedy a serious disturbance in the Danish economy while avoiding undue distortions of competition and is therefore compatible with Article 87.3.b. of the EC Treaty, as explained in the Commission's guidance on state aid to banks during the crisis (see IP/08/1495). In particular, the measures are limited in time and scope and contain sufficient safeguards to avoid abuses.
Competition Commissioner Neelie Kroes said: "The rescue aid was necessary to avoid the insolvency of Fionia Bank which would have entailed a risk for the stability of the Danish financial markets. The Commission is satisfied that the rescue aid is proportionate and does not give rise to undue distortions of competition".
In the wake of the financial crisis, Fionia Bank experienced problems in late 2008 and was ordered by the Danish Financial Supervisory Authority to increase capital ratios. It also had liquidity problems. Under the terms of the rescue aid, all assets and liabilities (except subordinate debt and equity) will be transferred to a new entity with a view to restructuring Fionia Bank and making it viable again.
The Commission found that there would have been a clear risk of failure of Fionia Bank in the absence of the rescue aid.
The measures taken by the Danish authorities were appropriate to remedy Fionia Bank’s solvency problems and restore confidence in the Danish financial markets. In particular, the rescue aid did not go beyond what was necessary to keep the bank in business and it cannot be used to engage in an expansion of the bank's activities. The aid is approved as a temporary rescue measure and Denmark has made the commitment to provide a restructuring or a liquidation plan or a proof that the measures have been reimbursed in full or terminated for Fionia Bank by 15 October 2009.
The non-confidential version of the decision will be made available under the case number NN 23/2009 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.