Brussels, 03/11/2008 (Agence Europe) - On Friday 31 October, the French authorities approved a debt-refinancing scheme for credit institutions. On the same day, in a different decision, the European Commission also endorsed a Dutch state guarantee scheme.
On 16 October 2008 the French authorities passed a law authorising a refinancing scheme. They officially notified the Commission about the scheme on 28 October 2008. This does not involve a direct guarantee scheme as such but rather, use of a structure set up for this purpose, the société de refinancement des activités des établissements de crédit (SRAEC - refinancing company for the activities of the credit institutions), which will be the only institution enjoying a state guarantee. SRAEC will issue securities guaranteed by the State (maximum of €265bn) with a view to making loans to credit institutions against collateral. The credit institutions will have to pay a premium over and above the normal market price. The Commission approved the mechanism because it provides non-discriminatory access for banks and imposes a deadline and its scope. It also contains appropriate safeguards against abuse of the scheme and will enable distortions of competition to be kept to a minimum.
The Dutch guarantee scheme, according to the European Commission, is in line with its Guidance Communication on state aid (EUROPE 9760). The Dutch scheme was notified on 21 October and includes a state guarantee on short and medium term debts that are still not underwritten. The national authorities are therefore hoping to restore and facilitate the financing of Dutch financial institutions, which is hampered by the drying up of the interbank lending market and which in turn endangers the provision of loans to companies and households. The Commission found that the scheme provides for non discriminatory access, is limited in time and scope, requires an adequate guarantee fee and provides safeguards to minimise distortions of competition. (C.D. / trans/rh)