Brussels, 01/12/2010 (Agence Europe) - The vice-president of the European Commission, Commissioner Almunia, announced on Wednesday 1 December 2010 that it was extending the temporary state aid system introduced in 2008 until 31 December 2011, but has introduced stricter rules and will be phasing the system out in order to return to normal market operations.
For the financial industry, Almunia explained that from 1 January 2011 onwards, any bank requesting state aid in the form of capital or the bailout of toxic assets must submit a restructuring plan. In the past, this only applies to struggling banks that had received aid of more than 2% of their risk-weighted assets. The 2% threshold has been scrapped and the measure applies tighter rules than set out in the guarantee systems introduced in July 2010 (see EUROPE 10167).
For the non-financial industry, the Commission is keeping a number of measures to encourage access for companies to bank lending, particularly small businesses (publicly subsidised guarantees and subsidised loans for the building of green products). Other facilitation measures are for start-ups, for which the maximum amount of capital or other funding that a state can invest goes up from €1.5 million to €2.5 mil. This aims to fill a gap in the market because banks are reluctant to invest in start-ups during a crisis. The measures will end in 2013, however, with a review of guidelines in this connection in the meantime. In order to return to normal market operations, cash flow loans for big companies will now not be allowed in the temporary state aid system and struggling companies will no longer be granted them. The Commissioner explained that the upper threshold for companies to be eligible for aid without having to notify it to the Commission has been cut from €500,000 to €200,000. The final part of the scheme is for companies struggling to get insurance from private insurance companies that have tightened up their foreign trade insurance contracts. The Commission has decided to extend until 31 December 2011 the simplified short-term export credit (insurance) system introduced in the temporary state aid system, and has extended until 31 December 2012 the time period of the 1997 communication on short-term export credit.(F.G. trans fl)