Brussels, 23/12/2008 (Agence Europe) - On Tuesday 23 December 2008, the European Commission authorised two lots of German state aid for banks hit by the credit crunch.
IKB - Germany is granting IKB a guarantee to cover the bank's medium-term refinancing needs in the financial crisis. The aid will ensure that IKB's restructuring is not impeded by lack of liquidity. The Commission has welcomed the plan to limit the German state aid programme's impact on competition, particularly the restrictions and the suitable level of state funding for IKB. The aid for IKB forms part of an existing German state aid system already approved by the Commission, but had to be newly notified to the Commission because IKB has already been granted state aid in the past. The analysis by DG Competition backed the analysis of German experts that the new aid measures is wholly motivated by external events. The planned state aid comprises a guarantee of almost 5 billion euros for new loans issued by IKB, in return for market-oriented remuneration. The non-confidential version of the decision will be published under reference number 639/2008 in the state aid register on DG Competition's website.
NordLB - On the same day, the Commission approved a guarantee package that Germany is planning to grant NordLB bank. The programme was notified on 18 December and what is different about it is the fact that the debt covered by the aid is highly collateralised. The guarantee programme is built on a special purpose vehicle that supplies financing to NordLB via securities with a maximum maturity of three to five years, backed by a very good, diversified guarantee pool of assets that is constantly reviewed. In so far that the maximum maturity may go up to five years this is justified by the structure of NordLB's liabilities. The German Länder (regions) of Lower Saxony and Saxony-Anhalt would provide state guarantees on the securities and would receive a market-oriented remuneration. The guarantee covers new, short or medium-term debt. Germany has pledged to publish a report every six months on implementation of the guarantee system and, if the guarantees are activated, a restructuring programme for NordLB within six months. The non-confidential version of the decision will be published under reference number 655/2008. (C.D. trans fl)