WIREDGOV

Brussels, 01 June 2011 - The European Commission has authorised, under EU state aid rules, a six month prolongation of guarantees schemes for credit institutions in Ireland and Spain, until 31 December 2011.

The Commission considers the extension of the measures to be in line with its guidance on support measures for banks during the financial crisis. In particular, the extended measures are well targeted, proportionate and limited in time and scope.

The Commission has, therefore, concluded that the guarantees schemes represent an appropriate means of remedying a serious disturbance in the Irish and Spanish economies and as a such, are compatible with Article 107(3)(b) of the EU Treaty.

During the application of the crisis rules for State aid to banks, the Commission has been authorising guarantee schemes on banks’ liabilities for periods of six months in order to be able to monitor developments and adjust conditions accordingly.

The number of guarantee and liquidity schemes has gone from 16 at the end of 2010 to nine in the first half of 2011. The use of State guarantees has also decreased, as the financial situation improved somewhat, banks are being restructured and the conditions of the guarantees themselves were tightened in July 2010.

Background

• Irish guarantee scheme

The revised Irish guarantee scheme was initially approved on 20 November 2009 (IP/09/1787) and extended on 31 May 2010 (MEX/10/0531), 28 June 2010 (MEX/10/0629), 21 September 1010 (IP/10/1154) and 10 November 2010 (MEX/10/1110).

• Spanish guarantee scheme

The Spanish guarantee scheme was first approved on 22 December 2008 (IP/08/2049) and extended on 25 June 2009 (MEX/09/0625), 1 December 2009 (MEX/09/1201), 28 June 2010 (IP/10/854) and 29 November 2010 (MEX/10/1129).

All documents and legislation concerning the State Aid temporary rules established in response to the economic and financial crisis, including those applicable to State guarantees of banks’ liabilities, are available here:

http://ec.europa.eu/competition/state_aid/legislation/temporary.html