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IP/10/789

Brussels, 23 June 2010

Commission extends bank guarantee scheme in Germany and recapitalisation scheme in Hungary

The European Commission has extended until the end of the year a rescue scheme for credit institutions in Germany. The extended scheme features higher premiums to be paid by the banks for the guarantees granted by the State. This is to encourage banks to finance themselves without state support and to limit distortions of competition. The Commission has also extended until 31 December the Hungarian recapitalisation scheme for credit institutions. The vast majority of the loan guarantee, recapitalisation and other schemes, put in place at the end of 2008 to ensure financial stability at the height of the financial crisis, expire this month. The Commission has announced that for the guarantee schemes to be extended the fee charged by the government needs to be increased and that the banks that continue to rely heavily on them should undergo a viability review. EU finance ministers agreed with this approach.

The German rescue scheme for credit institutions

The European Commission has authorised, under EU state aid rules, the extension until 31 December of a German rescue package for credit institutions. The scheme, which expires at the end of this month, was initially approved on 27 October 2008 (see IP/08/1589) and amended on 12 December 2008 (see IP/08/1966).

The Commission considers the scheme to be in line with its guidance on state aid to banks during the crisis (see IP/08/1945) and the recent adjustment of the rules for State guarantee, endorsed by the Ecofin Council (see conclusions of 18 May 2010) meeting on the phasing out of the support measures for the financial sector.

In particular, the extended measures are well targeted, proportionate and limited in time and scope. The extended rescue package includes higher premiums for the state guarantee, in order to provide an incentive for banks to refinance themselves on the markets without state support and to limit distortions of competition. The Commission has therefore concluded that the extended measures represent an appropriate means of remedying a serious disturbance in the German economy and as such are compatible with Article 107(3)(b) of the EU Treaty.

State aid: Commission approves extension of Hungarian recapitalisation scheme for credit institutions

The European Commission has authorised, under EU state aid rules, a six months extension until 31 December 2010 of the Hungarian recapitalisation scheme for credit institutions.

The recapitalisation scheme makes available new capital to credit institutions in exchange for preference shares, to enable them to strengthen their capital base against potential losses. The Commission found the extension of the scheme, initially approved on 12 February, 2009 (see IP/09/253), to be in line with its guidance on state aid to banks during the crisis (see IP/08/1945 and IP/08/1901).

In particular, the extended measures are well targeted, proportionate and limited in time and scope. The Commission has therefore concluded that the extended measures represent an appropriate means of remedying a serious disturbance in the Hungarian economy and as such are compatible with Article 107(3)(b) of the EU Treaty.


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