IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 29 Jun 2012 | Removal date: open ended
Still in force

Loan guarantee

On 6 March 2012, Denmark notified to the European Commission the split of FIH bank and the shift of risky assets to a "bad bank."
 
FIH was found in 1958 and specialized in lending to Danish corporates with a focus on SMEs. It is Denmark's fifth largest bank (para. 7, letter from the EC to Denmark, Brussels 29.6.2012). The bank has a balance sheet of EUR 11.2 billion.
In the aftermath of the financial crisis, FIH needed state guarantees in the form of State-guaranteed bonds of approximately EUR 5.7 billion. These bonds expire in 2012 and 2013, consequently FIB faces refunding problems on the market. (para. 10 & 11)
To solve the liquidity constraints, Denmark proposes to transfer risky assets into a separate bad bank and thereby increase the credit worthiness of the FIB bank.
The assets are transferred to FIH Holding that will than be purchased by the Financial Stability Company (FSC). Therefore, the state indirectly aquires risky assets amounting for EUR 2.3 billion.
 
The EC finds that: ' The advantage procured by the measure will strengthen the position of FIH after the hive-off of assets and liabilities as regards capital and liquidity compared to those of its competitors who will not benefit from similar measures. The measure will therefore enable FIH to improve its market position. The measure therefore can lead to a distortion of competition. The measures must therefore be regarded as potentially affecting trade between Member States. (para. 57 & 58)
 
In a press release from 2014, the state aid involved is estimated at around EUR 300 million. (EU press release 11 March 2014)
 
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

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