Global Trade Alert

On 8 May 2013, Spain informed the EC about a EUR 200 million-guarantee measure in favor of Sociedad de la Comunitat Valenciana (SGR). The amount was granted on 26 July 2013. Already on 29 March 2012, SGR received a capital injection of EUR 60 million.
 
SGR is a mutual guarantee company. SGR provides guarantees to companies, mainly SMEs, allowing them to receive loans from banks at better conditions (par. 8, letter from the EC to Spain, Brussels 13.2.2014) The total of outstanding guarantees amount for EUR 1.2 billion. SGR has a market share of 20 per cent (in terms of risk guaranteed) and faces competition by 23 similar companies.
 
Due to SGRs high expose to real estate and the high default risk in the Spanish real estate sector, especially in the region of Valencia, SGR made large losses. Consequently, its capital ratio decline and went below the minimum requirements by the bank of Spain (par. 16)
 
In order to fullfil the requirements, the state granted a capital injection of EUR 60 million. The capital injection mainly covers incurred losses (par. 19)Furthermore, the EUR 200 million guarantee is aimed at covering a loan provided by the state of EUR 130.3 million.
 
The EC finds that: 'The guarantee has been provided by the Generalitat de Valencia, which is a Regional Government of Spain and therefore part of the Member State.' (par. 47) 'That advantage was not available to other entities.' (par. 50)
 
The EC concludes that: 'the measures could distort competition and are likely to affect trade between Member States because SGR provides guarantees to companies, a service which is also provided by other financial institutions and in particular by the banking sector.' (par. 53)
 
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 discriminator