Brussels, 28/04/2009 (Agence Europe) - On Tuesday 28 April, the European Commission approved a package of amendments to the Swedish state guarantee scheme for financial institutions, initially approved on 30 October 2008 and 29 January 2009 (EUROPE 9773 and 9830). The changes concern the prolongation of the scheme's validity until 31 October 2009 and the extension of its scope. The Commission found that the amendments were in line with its guidance on state aid to banks during the crisis. In particular, they are well targeted, proportionate and limited in time and scope. The amended Swedish guarantee scheme is therefore compatible with Article 87.3.b of the EC Treaty, which permits aid to remedy a serious disturbance in the economy of a Member State.
On 16 March 2009, Sweden notified the following modifications to its support measures for the banking industry: prolongation of the period during which guarantees can be provided by six months, until 31 October 2009 (instead of 30 April 2009); extension of the material scope of the scheme by including uncollateralised debt instruments with a term of up to five years, whereas it previously covered only maturities of up to three years; a strict limit, however, is attached to the amount of guaranteed debt instruments with longer maturity. Accordingly, a maximum of SEK 500 billion of guaranteed instruments with terms over three years will be allowed. The total amount of guarantees that can be granted under the scheme remains unchanged at SEK 1,500 billion; amendment of the eligibility criteria for institutions covered by the scheme. Participating banks will only need to meet the basic legal capital requirements (and not the enhanced capital levels that applied previously). However, as before, only solvent institutions may benefit from the guarantee. The purpose of the changes is to improve the short and medium term lending and help to smooth the banks' transition from reliance on state guarantees as markets recover. (O.L./trans/rh)