← back to the state act
Inception date: 01 Nov 2008 | Removal date: 01 Jun 2011

Capital injection and equity stakes (including bailouts)

Sweden submitted a notification on 27 October 2008.

In response to the ongoing exceptional turbulence in world financial markets, Sweden intends to bring forward a package of measures under the umbrella of the "Lagen om statligt stöd till kreditinstitut" designed to restore stability to the financial system and to remedy a serious disturbance to the Swedish economy. These measures have as their objective restoring confidence and encouraging healthy interbank lending, through the provision of liquidity, the provision of a state guarantee to new debt issuance and other measures that may prove necessary.

The central element of this package is a bill that will give the government broad powers to grant various forms of urgent aid to financial institutions. Among the measures it intends to take in response to the present financial crisis is the institution of a guarantee scheme in order to support the medium term financing needs of banks and mortgage institutions. Eligible institutions are banks and mortgage institutions incorporated and operating in Sweden (including Swedish subsidiaries of foreign institutions) that are solvent. 

Sweden will make available a state guarantee to new short and medium term debt issuance. Under this scheme, institutions will have the option to enter into an agreement with the state which in turn would guarantee the institutions' new issuance of debt instruments in exchange for a fee. 

The State will initially guarantee up to SEK 1,500 billion of debt instruments.

Sweden accepted that the notified measures constitute state aid within the meaning of Article 87(1) of the EC Treaty. The Swedish authorities claim that the measures are compatible with the common market because they are necessary to remedy a serious disturbance in the Swedish economy pursuant to Article 87(3)(b) of the EC Treaty.

The Commission agrees with the position of Sweden that the guarantee scheme constitutes aid to the institutions concerned pursuant to Article 87 (1) EC and gave the following assessment:

"The guarantee on the new issued debt allows the beneficiaries to refinance at advantageous conditions. This gives an economic advantage to the beneficiaries and strengthens the position of these beneficiaries compared to that of their competitors in Sweden and other Member States and must therefore be regarded as distorting competition and affecting trade between Member States. The advantage is selective since it only benefits the beneficiaries of the scheme and is provided through State resources. In particular, the Commission is convinced that in the current circumstances of financial crisis no private investor would have granted such a significant guarantee on senior debt of the participating banks. Moreover, as regards the provision of liquidity provided by the Riksbank, the Swedish Central Bank, the Commission considers that its lending activity is in principle within the remit of a central bank's role as a monetary authority, and would normally be characterised as general measures and therefore not constitute state aid. However, the Commission notes that the guarantee scheme will allow some beneficiaries to obtain high quality collateral which might be used to obtain liquidity from the Riksbank. It is this guarantee that makes such bank debt into the type of high quality collateral that the Riksbank requires. While this might be irrelevant from the point of view of the Central Bank, the collateral is only eligible because of the guarantee and may therefore be considered as contaminated by the aid to the collateral and not totally free of aid. " (par. 30-33 of the EC's letter to Sweden - Brussels, 29.10.2008 C(2008) 6538).

Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.

The Commission referred to its Communication on the financial crisis and concludes that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 28-51 of the letter).


Prolongations and amendments of the bank guarantee scheme - State aidN 26/2009, N154/2009, N544/2009, N127/2010,N207/2010 & N543/2010


On 16 March 2009 Sweden notified a request to prolong and amend its support measures for the banking industry. The original support measures, notified on 27 October 2008, were approved by Commission decision of 29 October 2008 in state aid case N 533/2008 ("the original decision"). 

Swedish credit markets are still disturbed, and these disturbances are stronger in market segments with longer maturities. In present circumstances, the Swedish government considers it necessary to maintain the Scheme for another six months to provide further security regarding bank funding.

In present circumstances, the Swedish government considers it necessary to maintain the Scheme for another six months to provide further security regarding bank funding.Sweden consequently intends to extend the scope of the Scheme so that guarantees can cover instruments issued until 31 October 2009 included.

Sweden  intends to widen the scope of the Scheme so that guarantees can cover any form of eligible instruments with a maturity of more than 90 days and up to five years (as opposed to a maximum of three years, which is the present maximum maturity for all instruments except for covered bonds). A maximum of SEK 500 billion of guaranteed debt instruments with terms over three years will be allowed.

The Commission concluded that the amendments in question do not alter its previous assessment (see above) in the decision of 29 October 2008 in state aid case N 533/2008 (as amended by its decision of 29 January 2009 in state aid case N 26/2009) that the measures under the Scheme are compatible with the common market. The Commission decided not to raise objections.


Following the amendments, which included an extension of the Scheme, further extensions requests have been notified by Sweden.

On 26 October 2009 the Commission approved the scheme's extension until 30 April 2010 (State aid N 544/2009), on 22 April 2010 until 30 June 2010 (State aid N 127/20105) and on 15 June 2010 until 31 December 2010 (State aid N 207/20106). Finally, on 18 November 2010, Sweden notified a fourth extension of the Scheme until 30 June 2011.


According to Sweden, the measure was motivated by uncertainties regarding the Bank's future funding situation. (par. 8 of the letter from the EC to Sweden - Brussels, 1.12.2010
C(2010) 8584 final.)


The Commission found that the notified extension of the Scheme constitutes State aid within the meaning of Article 107(1) TFEU. However, since the extension of the Scheme fulfills the conditions for aid under Article 107(3)(b) TFEU, it is compatible with the internal market. The Commission has accordingly decided not to raise any objections to the extension of the Scheme until 30 June 2011 included. (par. 29 of the letter)




A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.



Please report this page in case you detect an inaccuracy in its content.