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Inception date: 01 Nov 2008 | Removal date: 01 Dec 2010

Loan guarantee

On 21 October 2008, the Dutch authorities notified the guarantee scheme to the Commission -- State aid N 524/2008. 
The measure aims to tackle the liquidity problems of the financial institutions which appeared because the market of non-guaranteed loans dried up. As a consequence, fundamentally sound and viable financial institutions cannot finance themselves anymore. With the notified measure, the Dutch authorities expect that the access to financing of the financial institutions will be restored, such that the provision of loans to companies and households is continued.
The guarantee scheme has not in itself the objective of improving the solvability of banks. A bank will receive a guarantee only if it has a solvency ratio and liquidity (in each case current and forecasted) to the satisfaction of the Dutch authorities, taking into account the requirements of the Wet op het financieel toezicht (financial markets supervision act, "FMSA"), as applied to the bank concerned by the Dutch central bank. The guarantee scheme is accessible to banks, as defined in the FMSA, with a seat and substantial operations in the Netherlands. It is therefore accessible to subsidiaries of foreign banks having substantial operations in the Netherlands. The Dutch State granted guarantees on senior unsecured debt securities.
The total volume of the guarantee scheme is 200 billion euro.
The Dutch authorities notified the scheme as aid in the meaning of Article 87 (1) of the EC Treaty. The Commission agreed with the position of the Netherlands that the guarantee scheme constitutes aid to the financial institutions concerned and gave the following assessment:
"The risk of the guarantee is supported by the State and the measure therefore involves State resources. The measure is selective as only certain debts of certain banks will be guaranteed. The guarantee on the newly issued debt allows the beneficiaries to get the required liquidity, whereas it would not obtain this financing on the market, or at least at a higher price. This gives an economic advantage to the beneficiaries and strengthens the position of these beneficiaries compared to that of their competitors. It must therefore be regarded as distorting competition. As subsidiaries of foreign banks are present on the Dutch banking market and as Dutch banks have subsidiaries and activities in other Member States, the measure affects trade between Member States." (par. 23 of the EC's letter to the Netherlands - Brussels, 31.10.2008
C (2008) 6616 - State aid N 524/2008).
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. 24-47 of the letter).
Prolongations and Amendment of the Dutch Guarantee Scheme - State AidNN16/2009, N 379/2009, N 669/2009 and N 238/2010
On 6 March 2009, the Netherlands notified several amendments to the Guarantee Scheme under case number NN 16/2009. Given that the Dutch authorities had already put some of the amendments into effect in breach of Article 108(3) TFEU, the Commission registered the case as NN.
On 23 June 2009, the Netherlands notified the Commission a request to prolong until 31 December 2009 and to amend the Guarantee Scheme. In the same decision, the Commission also approved the amendments of NN 16/2009.
Description of the changes to the Guarantee Scheme
- The maximum maturity of the guaranteed debt instruments has been extended from three to five years. The Dutch authorities have committed to allocate at the maximum one-third of the Guarantee Scheme's total budget of EUR 200 billion (i.e. EUR 66.6 billion) in favor of debt instruments with a maturity of more than three years.
- The conditions on corporate governance under the Guarantee Scheme have been broadened.
- Originally, the State guarantees had been granted only to the following instruments: commercial paper, certificates of deposits and medium-term notes. The scope of debt instruments eligible for a State guarantee has been extended to all the senior unsecured debt instruments or borrowing of an eligible bank. This modification will allow State guarantees on private placements, for instance.
On 1 December 2009, the Netherlands notified the Commission a request to prolong and amend the Guarantee Scheme until 30 June 2010.
The Dutch State notified finally on 9 June 2010 a new request to prolong and amend the Guarantee Scheme until 31 December 2010. The Dutch authorities also intend to increase the guarantee fee again for all rating categories. (details par. 19 of the the EC's letter to the Netherlands -Brussels, 29.6.2010 C(2010) 4437 final.)
The Commission has decided not to raise objections against the amendments and prolongation of the Guarantee Scheme until 31 December 2010, since it fulfils the conditions to be considered compatible with the Treaty on the Functioning of the European Union.
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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