Brussels, 06/08/2010 (Agence Europe) - On Thursday 5 August, the European Commission authorised the Lithuanian aid plan aimed at stabilising the markets as a response to the global financial crisis.
The aid package will be comprised of three measures intended to stabilise the financial markets. These are: - an asset relief measure, whereby Lithuania will take over certain categories of bank assets from beneficiary banks in exchange for cash or government securities. - a recapitalisation measure, making available new capital to credit institutions in the form of subordinated loans, to strengthen their capital base against potential losses; - and a guarantee measure covering, against remuneration, loans and other senior financial liabilities (except interbank deposits). The remuneration is aligned on the recommendations of the European Central Bank (ECB).
The Commission concluded that the support package comprises elements of state aid but contains several provisions aimed at ensuring its adequacy and proportionality, in line with the EU state aid rules. Hence, the scheme is an appropriate, proportionate and necessary means to maintain confidence in the Lithuanian credit institutions' creditworthiness. The Commission states that: “In particular, the scheme is open to all credit institutions and branches operating in the Lithuanian market. It is limited in time and scope, with entry windows and budget caps. It requires beneficiaries to pay a market-oriented remuneration and aligns banks' incentives with public policy objectives”. Finally, Lithuania has committed to verify to notify viability or restructuring plans for banks that rely on the support measures, the Commission notes. (O.L./transl.jl)