European Commission - Press release
State aid: Commission grants temporary approval to Spanish support for Banco de Valencia
Brussels, 22 November 2011 - The European Commission has temporarily approved, under EU state aid rules, a capital injection up to €1 billion and a liquidity facility of up to € 2 billion for Banco de Valencia, a small publicly-listed bank based in Eastern Spain. The funds will be provided by the Spanish Fondo de Reestructuración Ordenada Bancaria (FROB), which was created in 2009 to support the consolidation in the Spanish banking sector and ensure an orderly restructuring of banks.
The Commission decision finds the rescue package to be in line with its guidance on state aid to banks to overcome the financial crisis (see IP/08/1495 ). The rescue measures are limited in time and Spain committed to submit a restructuring plan within six months that will need to demonstrate the bank's return to long term viability, an appropriate sharing of the rescue burden and measures to address distortions of competition.
Banco de Valencia is a small bank in terms of its share of the total banking assets in the Spanish financial system, but in the regions of Valencia and Murcia, where it mainly operates, it accounts for approx. 7% and 4% of both credit and deposits.
This is the seventh Spanish credit institution taken over by FROB. The Commission approved restructuring aid for Caja Castilla-La Mancha (see IP/10/855 ) and CajaSur (see IP/10/1479 ). The Commission also approved rescue aid for Caja de Ahorros del Mediterraneo (CAM) (see Midday Express 25.7.2011 ), NovaCaixaGalicia, Catalunya Caixa and Unnim (see IP/11/1143 ). Approval of the restructuring aid for these four credit institutions is still pending.
Earlier this year, the Bank of Spain ordered 12 financial institutions to increase their solvency levels up to 8% or 10% of their capital principal before the end of September 2011.
Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU) allows Member States to rescue companies if this is required to remedy "a serious disturbance" in the market.
The non-confidential version of the decision will be made available under the case number SA.33917 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