Brussels, 27/05/2010 (Agence Europe) - The new scoreboard for state aid, published on Thursday 27 May by the European Commission, shows that the reliance of financial institutions on emergency support through state guarantees and recapitalisation is declining. “The declining use of state guarantees is an encouraging indicator that the financial sector has begun to return to normal market conditions”, said Joaquin Almunia, Commission Vice-President responsible for competition policy, who commented on the documents. He said member states firmly support the Commission's strategy aimed at gradually eliminating support measures.
Almunia said the Commission had authorised measures presented by the member states for an overall maximum volume of €4131.1 billion. He wished to stress the word “authorised”, indicating that most of this amount was made up of state guarantees and not of amounts effectively used. The guarantee umbrellas account for over three quarters of this volume, amounting to €3149.8 billion, of which only €993.6 billion have been used by banks. All in all, the effective use of state guaranteed funds and recapitalisation measures available account for a total of €1235.2 billion.
Overall, the Commission has approved guarantee umbrellas in 19 member states amounting to €3149.8 billion, of which €2747 billion was approved under schemes and €402.8 billion under ad hoc measures for individual banks. In reality, member states have effectively issued guarantees covering funding of up to €993.6 billion or 32% of the overall approved volume. In many instances, schemes contributed to restoring financial stability even without take-up, as they were often part of a general strategy to reassure financial markets. Finland, Poland and Slovakia, for example, have introduced guarantee schemes which have never been used.
In member states where guarantee measures have been used, the scoreboard shows that the bulk of state-guaranteed bonds was issued in the first quarter of 2009, where they reached a monthly average of 30% of banks' total funding. The total amount of guaranteed bonds newly issued has decreased progressively and stood on average at 4% of banks' total funding in December 2009.
Furthermore, a number of member states such as France, Italy and the United Kingdom have already decided not to extend the validity of their guarantee schemes in order to speed up the return to normal market conditions. The Netherlands has tightened the pricing conditions of its scheme well in advance of the forthcoming general strategy to bring funding conditions closer to market conditions.
The overall volume of approved recapitalisation measures aimed to ensure lending to the real economy amounted to €503.1 billion, of which €338.2 billion have been approved under schemes and €164.9 billion under ad hoc measures for individual banks. So far, member states actually implemented recapitalisation measures amounting to €241.6 billion or 48% of the approved volume. With €149.2 billion, ad hoc measures were almost fully implemented while the lower implementation rate for schemes, with around €92.3 billion invested so far, may reflect a general strategy of member states similar to the approach for guarantees. (F.G./transl.jl)