EU Banking Commission extends deadline

 

The European Commission has allowed an extension - until 31 December 2010 -the Spanish recapitalisation measures in favour of the banking sector and the Portuguese bank guarantee and bank recapitalisation schemes.

The Spanish recapitalisation scheme, known as "FROB", was initially approved on 28 January 2010 and was due to expire on 30 June 2010. The scheme has now been extended in order to permit individual recapitalisations.

The extended Portuguese guarantee scheme requires the banks to pay higher premiums for the guarantees granted by the State. It was initially approved on 29 October 2008 and is to encourage banks to finance themselves without state support and to limit distortions of competition. It also includes higher premiums for state guarantees, thereby incentivising banks to refinance themselves on the markets without state support and limiting undue distortions of competition.

The Commission considers the scheme to be in line with its guidance on state aid to banks during the crisis and the recent adjustment of the rules for state guarantees, endorsed by the 18 May 2010 EU Council of Economic and Financial Affairs Ministers on the phasing out of support measures for the financial sector.

A majority of support schemes for financial institutions, put in place in 2008 and 2009 to ensure financial stability, have been periodically extended, generally for six months, when requested by the Member States concerned and justified.

The Commission has already extended under the same conditions its authorisation of bank guarantee schemes in Sweden, Germany, Austria, Latvia, Ireland, Spain, Denmark, The Netherlands, Slovenia, Greece and Poland.