Commission welcomes revised Irish guarantee scheme
13 October 2008
The Commission welcomed the various changes and commitments made by the Irish authorities and will proceed urgently to the adoption of a decision on the Irish scheme in accordance with EU state aid rules.
The Irish authorities have submitted to the European Commission a scheme that addresses issues that had been raised by the Commission relating to the maintenance of the integrity of the single market in financial services and compliance with EU state aid principles.
Issues raised by the Commission include:
- non-discriminatory coverage of banks with systemic relevance to the Irish economy, regardless of origin;
- a pricing mechanism that covers the funding costs of the scheme and ensures a fair contribution over time by the beneficiary banks;
- appropriate safeguards against abuse of the scheme, including restrictions on commercial conduct and limits to balance-sheet growth;
- accompanying measures to address structural shortcomings of certain banks, in particular if the guarantee has to be called upon;
- safeguards on the use of guaranteed subordinated debt (lower tier-2 capital), in particular regarding the solvency ratios of the beneficiary banks;
- review at 6-monthly intervals of the continued necessity for the scheme, in the light of changes in financial market conditions.
The Commission welcomed the various changes and commitments made and will proceed urgently to the adoption of a decision on the Irish scheme in accordance with EU state aid rules.
Press release
© European Commission
