ANNOUNCED AS TEMPORARYNo
On 29 May 2009 Italy notified a request to prolong its guarantee scheme for banks. The original measures notified on 11 November 2008, were approved on 13 November 2008 in State aid case N520a/2008.
In response to the exceptional turbulence in global financial markets, Italy brought forward a guarantee scheme designed to reinforce banks' capitalization and sustain the liquidity of the banking system.
In particular the Scheme aims at sustaining the medium and long-term financing of the banks and providing the banks with assets eligible for refinancing with the Eurosystem, by means of State guarantee and swaps transactions with the Ministry of Economy and Finance (MEF).
The three measures covered by the request for prolongation are:
a)State guarantee on new banks' liabilities
b)Swaps between State securities and liabilities of Italian banks
c)State guarantee in favour of non banking institutions willing to lend high quality bonds to Italian banks for refinancing operations with the Eurosystem.
the Commission gave the following assessment:
"As indicated in its decision of 13th November 2008, the Commission agrees with the position of Italy that the measures by the MEF constitute aid to the institutions concerned pursuant to Article 87 (1) EC. The prolongation of the scheme does not modify the nature of the measures and therefore constitutes aid pursuant to article 87(1) EC." (par. 32-33 of the letter from the EC to Italy - Brussels, 16.06.2009 C (2009) 4664 Final).
In its evaluation of the original state aid scheme the European Commission found that the implementation of the scheme would likely distort competition within the Common Market. Those measures according to the European Commission's letter to Italy "give an economic advantage to the beneficiaries and strengthen the position of these beneficiaries compared to that of their competitors in Italy and other Member States and must therefore be regarded as distorting competition and affecting trade between Member States."(par. 57 of the EC letter to Italy 13.XI.2008, C(2008) 6989 corr, Brussels).
In its decision of 13th November 2008, the Commission considered the notified measures compatible with the common market under Article 87(3)(b). The prolongation of the schemedoes not change the assessed compatibility with the common market. (par. 34-36 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.
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