IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 05 Oct 2010 | Removal date: 04 Jun 2013
Still in force

Bailout (capital injection or equity participation)

On 3 April 2009, Lithuania notified a State aid scheme in support of the Lithuanian banking sector, consisting of three measures, namely State guarantees for bank stability enhancement (hereafter "Guarantee"), Subordinated loans to banks (hereafter "Recapitalisation") and redemption of bank assets (hereafter "Asset relief").
 
In response to the financial crisis, Lithuania intends to bring forward a scheme consisting of three measures designed to create prerequisites for the State to take action for strengthening the stability and robustness of the Lithuanian financial system.
 
1. Asset relief: The Lithuanian Government will take over certain categories of bank assets from beneficiary banks in exchange for cash or government securities.
2. Recapitalization: The Lithuanian Government will participate in the capital of beneficiary banks by providing subordinated loans to them. This measure aims at strengthening the stability and credibility of a bank's activities by increasing its own capital.
3. Guarantee: The Lithuanian Government will provide, in return for an appropriate remuneration, a State guarantee for loans and other senior financial liabilities (except interbank deposits). This measure aims at enhancing the liquidity of a bank or otherwise strengthening its stability and credibility.
 
The total estimated budget for both asset relief and recapitalization measures would not exceed LTL 3 billion (EUR 870 million). The budget for the guarantee measure is LTL 3 billion (EUR 870 million).
 
The Lithuanian authorities accepted that the scheme contains State aid elements. Lithuania considered that the scheme is compatible with the common market because it is necessary to remedy a serious disturbance in the Lithuanian economy pursuant to Article 107(3)(b) TFEU.
 
The Commission agreed with the position of Lithuania that the scheme constitutes aid to the credit institutions concerned, pursuant to Article 107(1) TFEU and gave the following assessment:
 
"The recapitalization and the guarantee to credit institutions allow their beneficiaries to secure the required capital as well as liquidity on more advantageous conditions than would otherwise be possible in the light of the prevailing conditions in the financial markets. The asset relief measure may enable beneficiaries to avoid potential write-downs and provisioning and may free up capital held due to regulatory requirements. The measures thus give an economic advantage to the beneficiaries and strengthen their position compared to that of their competitors in Lithuania and 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 of the scheme and is provided through State resources." (par. 65 from the letter from the EC to Lithuania - Brussels, 5.8.2010 C(2010) 5472 final ).
 
The Commission has decided to consider the aid to be compatible with the internal market pursuant to Article 107(3)(b) TFEU.
 
 
First, Second,Third. Fourth and Fifth Extension of the Lithuanian Bank Support Scheme - State Aid SA.32188 (2011/N), SA.33135 (2011/N), SA.34288 (2012/N), SA.35129 (2012/N) and SA.36047 (2013/N)

 
On 4 January 2011, Lithuania notified a request to extend the bank support scheme by
six months until 30 June 2011. according to the Lithuanian authorities, the measures are necessary and proportionate to maintain financial stability in Lithuania.
 
On 6 June 2011, Lithuania notified a second request to prolong the bank support scheme by
six months until 31 December 2011.
 
On 27 January 2012, Lithuania notified a third request to extend the bank support scheme
by six months until 30 June 2012.
 
On 27 July 2012, Lithuania notified a fourth prolongation of the scheme until 31 December 2012
 
On 9 January 2013, Lithuania notified a fifth prolongation of the scheme until 30 June 2013
 
 
In all three cases, the Commission fond that the notified extension of the scheme was compatible with the internal market pursuant to Article 107(3)(b) TFEU. The Commission has accordingly decided not to raise objections.
 
 
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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