Brussels, 31st July 2008
State aid: Commission approves Danish rescue
package for Roskilde Bank – frequently asked questions
What were the measures on which the Commission took a decision?
The Commission has taken a decision on the liquidity facility granted by the
Danish National Bank to Roskilde Bank on 11 July 2008 and on the guarantees
granted by the Danish private sector and the Danish government to cover
potential losses under the liquidity facility.
Are any of the measures granted to Roskilde Bank prohibited?
Are any of the measures granted to Roskilde Bank state aid?
The part of the liquidity facility granted by the Danish National Bank as of
11 July 2008, which was guaranteed by the private financial sector, and the
private guarantee itself, do not constitute aid.
The remaining part of the liquidity facility that is guaranteed by the Danish
State and the state guarantee attached to it, does constitute state aid but aid
which is compatible.
These provisions are compatible as they comply with the EU Guidelines on
state aid for rescuing and restructuring firms in difficulty. In line with these
rules, the Danish authorities have given a commitment to submit in six months a
restructuring or a liquidation plan or proof that the loan has been reimbursed
in full and/or the state guarantee has been terminated.
Why is part of the measures not considered to be State aid?
The guarantee towards the Danish National Bank up to the amount of DKK 750
million (approx. € 100 million) was provided by "Det Private Beredskab"
(Det Private Beredskab til afvikling af nødlidende banker, sparekasser og
andelskasser), a fund set up by the private sector. Participation in this fund
is voluntary. Moreover, the members of the highest authority, the committee of
representatives, are private banks and the private bank members in the board of
directors (the decision-making body) have a veto right.. Therefore, the
Commission considered that no state resources are involved in the financing of
the guarantee provided by Det Private Beredskab. Consequently, this guarantee
does not constitute state aid under the EC Treaty rules (Article 87).
The loan covered by the guarantee of Det Private Beredskab was provided to
Roskilde Bank at a penal interest rate]. Moreover, the guarantee provides the
Danish National Bank with a highly secure coverage on its exposure to the
liquidity facility. Therefore, the Commission considered that the part of the
liquidity facility covered by the private sector guarantee does not contain any
advantage for Roskilde Bank, but that the Danish National Bank, and the Danish
State acted as a prudent market economy lender would have done. Therefore, the
Commission concluded that this part of the liquidity facility does not
How is it ensured that the aid is limited to the minimum necessary if the
liquidity facility and the government guarantee are unlimited?
mechanisms are in place to ensure that the aid amount is kept to the minimum
necessary. In particular, the liquidity facility is constructed so that Roskilde
bank receives only the cash needed to keep the firm in business for a maximum
period of 6 months. The Danish Central Bank has appointed an independent monitor
of the drawings under the liquidity facility. Furthermore, Roskilde Bank has
agreed not to carry out any important operations which may influence the
liquidity facility without the consent of the Danish Central Bank.
Were the measures notified?
The Danish authorities provided detailed information on the measures in
contacts beginning immediately after the measures were adopted. The full
information about the measures was communicated formally on 21st July
The government guarantee is not yet in place, as it still needs parliamentary
approval. It will however have retroactive effect as from 11 July 2008.
Have the Danish authorities provided all of the information which you
require for your assessment?
The Commission has received what it needs to authorise the rescue aid. The
Danish authorities have undertaken to send by 11 January 2009, that is by the
end of the six months period starting 11 July 2008 for which rescue aid can be
authorised, either a restructuring or liquidation plan for the bank, or a
confirmation that the aid measures have been brought to an end. If the
restructuring plan involved any state aid then this would be subject to a new
Commission authorisation and full details would need to be notified to the
What are the conditions to authorise rescue aid?
The conditions to consider an aid as compatible rescue aid can in general be
summarised as follows:
- The beneficiary has to be a firm in difficulty and it cannot have received
any rescue or restructuring aid during the past 10 years.
- The aid should in principle be in the form of liquidity support, but there
are certain exceptions to these rules in the banking sector, in order to allow
for prudential requirements. Furthermore, the aid should be restricted to the
minimum necessary to keep the firm in business for the rescue period.
- The aid must be granted in the form of loans or guarantees.
- The aid must be limited to a period of not more than 6 months.
- If the Member State communicates to the Commission within these 6 months a
restructuring plan or liquidation plan, then the rescue aid can normally
continue for the time the Commission needs to decide on this
What are the conditions to authorise restructuring
As regards the beneficiary, the conditions are the same as for rescue
As regards the aid, a restructuring plan, capable of restoring the long term
viability of the firm, must be provided. The state aid must be limited to the
minimum necessary in time and amount, and the beneficiary must significantly
contribute to the cost of the restructuring.
The aid must not distort
competition to an extent contrary to the common interest. In this respect, the
Commission may impose specific conditions and obligations on the