Brussels, 09/10/2008 (Agence Europe) - Whilst member states continue taking steps to save the banks at a national level, the Commission is seeking to assess the effects of these emergency measures on state aid rules.
On Wednesday 8 October, the British prime minister announced a total of up to £500 billion (€640bn) as an emergency measure. Jean-Pierre Jouyet and José Manuel Barroso informed MEPs on the same day that these measures are clearly part of the orientations taken by last weekend's mini-summit (EUROPE 9755) and the Ecofin conclusions (EUROPE 9756). The British rescue plan includes a bail out of British banks to the tune of £50 billion, a special Bank of England mechanism to provide short term liquidity (at least 200 billion) and a debenture loans guarantee of up to £250 billion. The European Commission must, however, make a definitive decision (once the plan is notified to it) but it appears that the part on the non-discriminatory nature of guarantees had been confirmed on Thursday 9 October by a spokesman.
The British approach has so far not been emulated, although in Spain, the government announced the creation of a fund of €30-50 billion to ensure the financing of banks and individuals and to increase liquidity (the funds will buy up healthy real estate loans from the banks). The Commission still does not have the details of the Spanish plan, explained the spokesman. In France, the government has concocted a legal structure for recapitalising one bankrupt bank. The approach, however, is still on a case-by-case basis (injections of capital for a stake in the bank in question) rather than overall support for the sector, as demonstrated with the Dexia bank example. One case involves last minute details (the Belgian, French and Luxembourg states are the guarantors for the bank's loans on the markets) that have still not been notified to Neelie Kroes who, nevertheless, remains “in close contact with the French and Belgian authorities”. Italy has not put any emergency rescue fund in place for banks in difficulty but similarly to France, it is taking action on a case-by-case basis through possible injections of public funds.
These different formulas (together with EBC action on liquidity and rates issues) aim to restore the confidence of the banking sector and predict any movement of panic among savers and are expected to induce an upswing on the stock exchanges, whose values have been continuing to plunge over the last few days. On Thursday 9 October, the European Commission also repeated the appeals by Mr Trichet for market players to keep their cool (EUROPE 9756). The spokesperson insisted that “those who sinned through excessive optimism in the past, should not now fall into excessive pessimism”. (A.B./transl.rh)