Brussels, 13/10/2008 (Agence Europe) - On 10 October 2008, the European Commission approved a Danish scheme aimed at restoring confidence in the Danish financial markets. The scheme would provide state liquidity facilities for banks operating in Denmark and protect depositors and ordinary creditors in case of insolvency. This is the first bank state aid scheme approved using the Commission's new approval procedure for emergency rescue measures. The Danish authorities notified the measure to the Commission on 8 October.
Several aspects of the Danish plan played in its favour with the Commission, which sees it as an example to be followed by other Member States. The Commission used the plan to help it draw up new guidelines, to be published on Monday 13 October 2008 (see EUROPE 9757 and related article in this issue). Only 'fundamentally sound' institutions, whose problems are essentially due to the current financial crisis, are eligible for guarantees, but insolvent banks need to be immediately unwound. The scheme is open to all banks established in Denmark and 'requires a significant financial contribution which ensures that an adequate premium is paid for the guarantee,' explains the Commission. The scheme will last two years and will be reviewed every six months by both Denmark and the European Commission. (C.D. trans fl)