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ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 29 May 2009 Finland notified a State Capital Injection Scheme for the deposits banks in Finland - State Aid N 329/2009.
Finland has notified a scheme allowing the State to inject capital into financial institutions via subordinated debt instruments. This scheme seeks to respond to the protracted consequences of the financial crisis by providing measures to secure banks' capital base. The measure at stake complements the guarantee scheme supporting short and medium term financing needs of banks.
The State can support deposit banks' capital by subscribing to a subordinated loan instrument issued by the bank. The subordinated loan is limited and granted separately for each deposit bank concerned and it shall not be transferable. It can amount at most up to 25 % of the regulatory required amount of own funds of each eligible bank. The total amount of capital to be distributed through the scheme is capped to 4 billion Euro.
The Commission agrees with the Finnish authorities that the Scheme constitutes state aid within the meaning of Article 87(1) of the EC Treaty in favor of the eligible deposit banking institutions and gave the following assessment:
" Indeed, the Scheme will enable the beneficiaries to secure capital on more favourable terms than would otherwise be possible in the light of the prevailing conditions in the financial markets. Since it confers an economic advantage on the beneficiaries and strengthens their position vis-ŕ-vis competitors in Finland and other Member States, the Scheme distorts competition and affects trade between Member States. The advantage is provided through state resources and is selective since it benefits only beneficiaries covered by the Scheme."(par. 28 of the letter from the EC to Finland - Brussels, 11.09.2009 C(2009)6931 ).
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 (Temporary Framework) and concluded 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. 33-47 of the letter).
Prolongation of the Recapitalisation Scheme - State Aid N 110/2010
On 19 March 2010 Finland notified a request to prolong its scheme for the State capital injection to deposit banks. The measure will be effective from 1 May 2010 until 31 October 2010.
The Comission gave the following assessment:
"'...' the notified prolongation of the Finnish Scheme does not alter its previous assessments in the decision of 11 September 2009 in State aid case N 329/2009, i.e., that the Scheme is compatible with the internal market. The Commission has accordingly decided not to raise objections." (par. 16 of the letter from the EC to Finland - Brussels, 14.4.2010 C(2010)2399 final)
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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