Global Trade Alert

On 18 December 2008 Italy notified a scheme allowing the State to subscribe to special bonds issued by banks with a view to supporting the financing of the economy. The legal basis is article 12 of Decree-Law No 185 of 28 November 2008 and the relating draft implementing decree.
 
The objective of the measures is to support the flow of finance to the real economy in the current context of financial crisis by strengthening the capital of the Italian banking system.
 
The beneficiaries of the notified measures are Italian banks, i.e. all banks incorporated under Italian law (subsidiaries of foreign banks included), provided that their shares be listed on a regulated market, or holding companies of Italian banking groups, whose shares are listed in regulated markets.
 
The Italian authorities accepted that the notified measures contain State aid elements. The Italian authorities claim that the scheme is compatible with the common market because it is necessary to remedy a serious disturbance in the Italian economy pursuant to Article 87(3)(b) of the EC Treaty.
 
The Commission agreed with the position of Italy that the measures by the MEF constitute aid to the institutions concerned pursuant to Article 87 (1) EC. "The recapitalization scheme will enable beneficiaries to secure the necessary capital on more favorable 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 the position of these beneficiaries compared to that of their competitors in Italy 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. 35 of the letter from the EC to Italy - Brussels, 23/12/2008 C(2008) 8998 final).
 
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. 37-61 of the letter from the EC to Italy - Brussels, 23/12/2008 C(2008) 8998 final).
 
Amendment of Italian bank recapitalisation scheme- N97/2009
On 16 February 2009 Italy notified an amendment to the recapitalisation scheme. The purpose of this amendment was to offer a second option for remuneration of the financial instruments
issued by the banks. The EC decided not to raise objections.
 
Prolongation of the recapitalization scheme - State Aid N 466/2009
On 31 July 2009 Italy notified a request to prolong its recapitalisation scheme for banks until 31 December 2009.
 
The Commission came to conclusion that the Scheme constitutes State aid within the meaning of Article 87(1) of the EC Treaty but since the Scheme satisfies the conditions for aid under Article 87(3)(b) of the EC Treaty, it is compatible with the common market.
 
Re-introduction of the Italian Recapitalisation Scheme - State aid N 425/2010
On 1 October 2010 Italy notified a request to re-introduce its recapitalisation scheme
for banks until 31 December 2010 in response to the exceptional turbulence in global financial markets.
 
The Commission has decided not to raise objections against the re-introduction of the Scheme until 31 December 2010, since it fulfils the conditions to be considered compatible with the internal market pursuant to Article 107(3)(b) of 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.