Brussels, 21 September 2010
State aid: Commission authorises guarantees for Irish financial institutions
The European Commission has approved until 31 December 2010 a guarantee scheme for credit institutions in Ireland, covering certain short-term liabilities. The scheme features higher premiums to be paid by the banks for the guarantees granted by the State and foresees adequate safeguards to minimise potential distortions of competition. The Commission therefore concluded that the scheme is an adequate means to remedy a serious disturbance in the Irish economy and is as such compatible with the special state aid rules put in place at the beginning of the global financial crisis.
The Commission has authorised until 31 December 2010 an Irish guarantee scheme for credit institutions, covering commercial paper, certificates of deposit, interbank deposits and corporate deposits, liabilities with maturity of less than three months issued between 30 September and 31 December 2010. A similar scheme (see IP/10/854) will expire at the end of this month.
The Commission considers that the guarantee measure is well targeted, proportionate and limited in time and scope. The guarantees are necessary to ensure continued access to funding for Irish banks in the coming months thereby contributing to financial stability in Ireland. The scheme incorporates higher fees, which are increasing over time, compared to the fees under the Eligible Liabilities Guarantee scheme. The higher fees combined with several behavioural and reporting commitments will provide an incentive for banks to refinance themselves on the markets without state support to the maximum possible extent and to limit distortions of competition. The Commission has therefore concluded that they represent an appropriate means of remedying a serious disturbance in the Irish economy and as such are compatible with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU).
The Commission initially approved the ELG Scheme on 20 November 2009 (see IP/09/1787) and agreed to its prolongation on 31 May 2010 (see MEX/10/0531). Ireland, like a number of other EU countries, also has a regular guarantee scheme for maturities longer than three months which is in place until 31 December 2010.
The non-confidential version of the decision will be made available under the case number N 347/2010 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.