Brussels, 10/12/2008 (Agence Europe) - On Wednesday 10 December, the European Commission approved the programme proposed by the Austrian state to support credit and insurance institutions. The Commission stated that it was satisfied by the measures envisaged to limit potential distortions of competition on the credit market. In particular, the Austrian package is the first to provide the possibility, for the institutions in question, to ensure the value of their assets. "The Commission is satisfied that the programme provides for adequate remuneration for the injection of capital and sufficient incentives for the institutions in question to reimburse the state's capital as quickly as possible" the spokesperson to the competition commissioner, Neelie Kroes, told the press.
The Austrian package consists of two main parts, brought together in a piece of legislation entitled the "Interbankmarktsträrkungsgesetz" (law on the reinforcement of the inter-bank market). First of all, an institution named "Clearingbank" will be set up. This institution will be guaranteed by the state and its mission will be to distribute funds (in various forms of credit) to financial institutions which express a need for it. These funds will come from deposits made by the other financial institutions, and from the credit market. The state investment in the Clearingbank, which will be limited to €75 billion, will consist solely of a guarantee against the credits offered. The second part of the Interbankmarktsträrkungsgesetz consists of a state guarantee mechanism directly available to institutions weakened by the financial crisis. €15 billion in total will be earmarked by this programme, which will allow banks and insurance companies to take out insurance with the state against the other loans, liabilities, or, a first amongst the programmes of its kind set up by the member states, their assets. "As the value of the assets has a considerable influence on the bottom line of the company, this value underlies, by extension, the ability of an institution to obtain credit", an expert explained. These guarantees provided by Vienna aim to allow businesses to keep their capacity to obtain credit, by protecting themselves against the drop in the value of their real estate, for example, or of the shares they may hold in another company. The guarantees are not, of course, free of charge: the premiums are calculated in line with the communication of the Commission of 8 December, the spokesperson of DG Competition confirmed. "The formula corresponds to the risk profile of the bank concerned", said Jonathan Todd. (C.D./transl.fl)