Brussels, 08/12/2009 (Agence Europe) - On Tuesday 8 December, the European Commission approved a Slovak scheme aimed at maintaining stability in the Slovak banking sector. After intensive exchanges with the Slovak authorities, the Commission concluded that the scheme was in line with its guidance communications on state aid to overcome the financial crisis and that it was an adequate means to remedy a serious disturbance of the Slovak economy.
In order to counteract ongoing turbulence on financial markets, Slovakia intends to provide a package of measures to maintain the stability of the domestic financial system and to mitigate the spill-over of the global financial crisis from the banking sector to the real economy. The Commission points out that the package consists of two different measures: capital injections and guarantees. The potential beneficiaries of the aid are systemically relevant banks incorporated in Slovakia, including subsidiaries of foreign financial institutions.
The Commission found that the scheme will contribute to maintaining the stability of the financial system in Slovakia. The measures are well-designed, it says, and provide safeguards to prevent the aid from being misused. For example, the bank cannot advertise the state support; there will be dividend bans, and management remuneration reductions. The capital injections and guarantees are priced adequately. The remuneration for capital injections increases over time. This is an incentive for banks to reimburse the capital to the state as soon as possible. Slovakia committed to implement state capital contributions and state guarantee measures only during a period of maximum six months after approval of the scheme by the Commission. Slovakia also committed to report to the Commission on the implementation of the scheme every six months. (O.L./transl.jl)