Brussels, 23/03/2009 (Agence Europe) - On Friday 20 March, the European Commission authorised a Slovenian aid plan to provide public aid to eligible lending institutions and guarantee them access to funding whilst stabilising the financial markets. The European Commission has pointed out that this system complies with its communication of October 2008 on state aid used for tackling the financial crisis.
The liquidity system authorised aims to provide access to short and medium term credit for lending institutions that are unable to finance themselves on the capital markets under the Slovenian guarantee mechanism previously approved (EUROPE 9803). The system is also aimed to support other financial establishments. In exchange for payment, the Slovenian state will provide against remuneration for short and medium term non-subordinated debt for a duration of one to a maximum of three years. The overall budget of the previously approved guarantee scheme and the present liquidity scheme is capped at €12 billion. Only solvent credit institutions, insurance, reinsurance, and pension companies are allowed to enter the scheme. The Commission decision covers a period of six months, following which Slovenia will either terminate the scheme or re-notify its extension to the Commission for further assessment.
The Commission considers that this scheme contains elements of state aid but foresees safeguards aimed at ensuring that the state intervention is proportionate, limited to what is necessary to stimulate interbank lending and adequate to reach this goal, in accordance with EU state aid rules, as outlined in the Commission's Guidance Communication (EUROPE 9769). In particular, the scheme provides for non-discriminatory access as it will be open to all solvent financial institutions in Slovenia. To benefit from the state loans, participating financial institutions are required to pay a market-oriented fee, in line with recommendations from the European Central Bank. Beneficiaries will be subject to behavioural commitments to avoid an abusive use of the state support. These include limitations on expansion and marketing and conditions for staff remuneration or bonus payments. In addition, Slovenia committed to notify restructuring or liquidation plans for each beneficiary that defaulted on state loans. Finally, Slovenia will report periodically to the Commission on the implementation of the scheme. In light of these commitments and conditions, the Commission concluded that the scheme would be an adequate means to restore confidence on Slovenian financial markets and to boost interbank lending. The safeguards will ensure that the state support is limited to what is necessary to stabilise the Slovenian financial sector and that negative spill-over effects are minimised. (O.L./trans/rh)