ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
On 19 January 2010, Spain notified a recapitalization scheme in order to carry out the restructuring of the Spanish banking system.
The legal basis for the Scheme is the Royal Decree-Law 9/2009 of 26 June, sobre reestructuración bancaria y reforzamiento de los recursos propios de las entidades de crédito and a draft Resolution of the Fondo de Reestructuración Ordenada Bancaria ("the FROB") implementing Article 9 of the Royal Decree-Law.
The beneficiaries of the Scheme are credit institutions established in Spain.
The FROB has an established original funding of EUR 9 billion, of which EUR 6.75 billion is contributed by the State Budget and the rest (EUR 2.25 billion) has been contributed by the Deposit Guarantee Funds. In addition, the FROB may resort to outside funding to finance its activities; however, outside funding may never exceed 10 times its original funding.
The Commission concluded that the measure contains state aid and gave the following assessment:
"The Scheme enables 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. This gives an economic advantage to the Beneficiaries and strengthens their position compared to that of their competitors in Spain and in other Member States and must therefore be regarded as distorting competition and affecting trade between Member States. The advantage is selective since it only benefits the Beneficiaries, and it is provided through State resources. In the current circumstances of financial crisis, capital injections would in all likelihood not be provided by market economy investors to the Beneficiaries on a comparable scale and on similar terms. As a consequence, the Scheme constitutes aid to the Beneficiaries within the meaning of Article 107(1) TFEU." (par. 32-33 of the letter from the European Commission to Spain - Brussels, 28.1.2010 C(2010)504 final)
Article 107(3)(b) TFEU 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 107 (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 107 (1) TFEU, it is compatible with the internal market according to the Article 107 (3)(b) TFEU. 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. 34-56 of the letter ).
Extension of the recapitalisation measures in favour of the banking sector in Spain - State aid N 317/2010
On 14 July 2010, Spain notified a request to: i) extend the Scheme until 31 December 2010, and ii) introduce an amendment to the Scheme consisting in the recapitalisation under exceptional circumstances of specific individual credit institutions not involved in an integration project with other credit insitutions.
Spain estimates that the measure is necessary and proportionate to carry out the restructuring of the Spanish banking system by maintaining confidence in the national financial system and enhancing its strength and solvency so that the credit institutions are sound and able to provide credit to the real economy. (par. 22 of the letter form the EC to Spain - Brussels, 23.7.2010 C(2010) 5127 final)
The Commission concluded that the extension in question does not alter its previous assessment in the decision of 28 January 2010 in State aid case N 28/2010 that the recapitalisation measure under the Scheme is compatible with the internal market. (par. 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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