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PR(05)30: EFTA Surveillance Authority accepts a limited state guarantee in favour of Liechtensteinische Landesbank

29.7.2005

29 July 2005

The EFTA Surveillance Authority closed today its examination of a State guarantee by the Principality of Liechtenstein in favour of Liechtensteinische Landesbank (LLB).

Earlier this month, the Authority proposed to the Liechtenstein authorities to alter the guarantee and to introduce a market premium. This proposal has today been accepted by the Liechtenstein authorities. With the amendments agreed by Liechtenstein, the Authority has concluded that the state guarantee no longer constitutes state aid, and has therefore closed the case.

Up to now, the LLB has enjoyed a State guarantee on its savings deposits and medium-term notes which was unlimited in time and amount. LLB did not have to pay any premium for the guarantee. The Authority considered the unlimited guarantee without remuneration to be incompatible with the state aid provisions of the EEA Agreement, as it gave the Landesbank an undue advantage over its competitors, which do not profit from a State guarantee.

With the amendments agreed by the Liechtenstein authorities, the guarantee will be limited to a period of 15 years and subject to the payment of a market premium for the guaranteed savings deposits and medium term notes.

The market premium has been established by an expert study in financial mathematics, which assessed for a guarantee similar to the state guarantee how much an insurer would charge in annual premiums. This rate will be, as a percentage of the annually established guaranteed amount of savings deposits and medium term notes, paid each year for the previous year. The Liechtenstein authorities will, further, regularly report on the calculation of the premium and its payment to the Authority.

 

For further information, please contact Ms. Annette Kliemann,Senior Officer, Competition and State Aid Directorate, Tel. (+32) (0) 2 286 18 80.

 

 




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