ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 23 July 2012, Spain notified to the European Commission a new recapitalisation scheme for credit institutions. The described scheme is a further, but autonomous development of a scheme initially notified in 2010 (see related measures).
The scheme aims at supporting banks with 'urgent capital needs' revealed through the European 'stress tests' for banks ('individualized accounting and economic assessment of the financial situation of the Spanish credit institutions') (par. 5-6, letter from the EC to Spain, Brussels 25.7.2012).The overall budget of the scheme is EUR 100 billion for all individual recapitalisation measures. (par. 20)
Beneficiaries of the scheme are credit institutions in Spain facing capital shortfall after the stress test. Further categorisation based on the stress test results can be found in paragraph 8 of the document. Support may be conditional on individual restructuring plans of the banks and based on the different categories, the support conditions may vary substantially. In any case the form of support is a capital injection by the state in the form of CoCos (convertible contingent bonds). These bonds have a minimum remuneration of 8.5 per cent in the first year (increasing over time). (par. 20) In emergency situations, the state may purchase ordinary shares, conditions listed in paragraph 26-31.
The EC finds that: 'Any recapitalisation by the State under the Scheme allows the Beneficiaries to secure capital on more favorable terms than would otherwise be possible in the light of the prevailing conditions in the financial markets' (par. 38)
The EC therefore concludes that: 'The measures strengthen their (the beneficiaries) position compared to that of their competitors in Spain and other Member States. As banking is an international business, the support must, therefore, be regarded as distorting competition and affecting trade between Member States.' (par. 40)
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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