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State Aid

PR(09)05: The Authority adopts temporary rules on state aid in the financial crisis

29.1.2009

The EFTA Surveillance Authority adopted today three sets of guidelines on how the EFTA States can best support undertakings, including financial institutions, in the current financial crisis whilst complying with state aid rules. The documents correspond to those adopted by the European Commission at the end of last year.

The three sets of guidelines adopted by the Authority relate to:

-         The application of state aid rules to measures taken in relation to financial institutions in the context of the global financial crisis. The chapter reminds the EFTA States of the conditions on which aid can be granted to remedy a serious disturbance in the economy of an EFTA State. In particular, access to state support must be open to all financial undertakings, including those from other EEA States. Furthermore, the measures taken by the State must be limited in time and scope and foresee adequate contributions from the beneficiary, for instance in the form of a market based premium. Moreover, it is specifically prohibited that beneficiary banks unfairly attract additional business opportunities as a result of government aid, as this would disproportionately distort competition in the sector. The measures put in place by the EFTA States will be closely monitored to ensure their effectiveness.

-         The recapitalisation of financial institutions in the current financial crisis. Financial support to banks in the form of recapitalisation aims at restoring financial stability and ensuring continued lending to the real economy. It should be limited to the minimum necessary and should include safeguards against undue distortions of competition. To meet these criteria, EFTA States should ensure that the support, to the extent it constitutes state aid, is given on a temporary basis. Special rules have been established with regard to the calculation of appropriate remuneration for the recapitalisation. The guidelines also foresee behavioural safeguards if aid is given to distressed banks, such as for example a restrictive policy on dividends. In all cases, there will be regular review of the measures undertaken, including submission of reports to the Authority.

-         The temporary framework for state aid measures to support access to finance in the current financial and economic crisis. This set of guidelines aims to help the EFTA States tackle the effects of the credit squeeze on the real economy, as it is directed towards companies in all sectors, especially SMEs. For a limited time period (until the end of 2010), EFTA States will be allowed to facilitate the provision of necessary liquidity assistance to undertakings, for instance in the form of guarantees, subsidised loans and by raising de minimis threshold up to EUR 500 000. Specific measures are foreseen to encourage companies to continue investing in a sustainable future, including development of green products.

Per Sanderud, the President of the Authority said: “By adopting these guidelines we ensure that companies in the EFTA States benefit from the same possibilities of state support in order to overcome the effects of the financial crisis as companies in the EU Member States. The new guidelines also explain how certain provisions of the EEA Agreement are to be applied, thereby providing legal certainty for the EFTA States.”

 

For further information, please contact:

Marianne Clayton
Competition and State aid
tel. (+32)(0)2 286 18 23

Agnieszka Montoya- Iwanczuk
Competition and State aid
tel. (+32)(0)2 286 18 59

Kjell-Arild Rein
Competition and State aid
tel. (+32)(0)2 286 18 86

 

 

Brussels, 29 January 2009




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