STATE AID DAY
Office for the Protection of Competition
FINANCIAL AND REAL ECONOMY CRISIS
AND STATE AID
Roland Schachl
Federal Ministry of Economy, Family and Youth
Unit C1/8 – EU State Aid Law
Brno, 17 April 2009
I – STATE INTERVENTIONS AGAINST THE
CRISIS ON THE FINANCIAL MARKETS
II – STATE INTERVENTIONS AGAINST THE
CRISIS IN THE REAL ECONOMY
LEGAL BACKGROUND FOR MEASURES
STRENGTHENING THE FINANCIAL SECTOR
 Interbank Market Strengthening Law of 26 October 2008
 Financial Market Stabilization Law of 26 October 2008
 Regulation of 30 October 2008 on determining
Stipulations on the Conditions and Impositions for
Measures according to the Financial Market Stabilization
and Interbank Market Strengthening Law
Duration of validity:
National legal provisions will terminate
with 31 December 2009, however, EC-decision requires
notification of prolongation of measures for any new aid
after 30 June 2009
VOLUME AND TYPE OF STATE INTERVENTION
80
70
60
50
40
30
20
10
0
€ billion
Guarantees
Capital
Saving
(75 %) Injections
Accounts'
(15 %) Safeguard
(10 %)
BENEFICIARIES

credit institutes and insurance companies with license
to operate banking business in Austria

minimum core equity capital (“Tier 1 – Ratio“) of 7 %

maintenance of a long-term equity capital of at least
a level according to BASEL II + 2 %-points
THRESHOLDS
► € 2 billion for guarantees for individual liabilities,
up to a maximum total of € 15 billion per bank
► € 3 billion for guarantees for assets per single bank
► € 3 billion for capital injections per single bank
► Amounts are fixed and supervised by a Clearing Bank.
INSTRUMENTS BY LEGAL BASIS
Interbank Market
Strengthening
Guarantees for the issue
of securities
Financial Market
Stabilization
Guarantees for liabilities
Guarantees for assets
Loans
Equity capital injections
Acquisition of shares
Take-over
COMPATIBILITY REQUIREMENTS FOR
CAPITAL INJECTIONS
Minimum interest
to be paid:
9.3 % for “Tier 1“-capital
8 % for „Partizipationskapital“
7 % for debt titles
Exception:
placement also to private investors
at a minimum portion of 30 per cent
Repayment:
at par in case of interest at 9.3 %
at 110 in case of interest at 8 %;
“step-up“-clause, limitation of dividends
with 1-year-EURIBOR + 1,000 basis points
LEGAL BACKGROUND FOR TEMPORARY AID
MEASURES IN THE REAL ECONOMY
 Law of 10 November 2008 on stimulating the Business
Cycle („Konjunkturbelebungsgesetz 2008 - KBG 2008“)
 Law of 31 March 2009 on stimulating the Business
Cycle („Konjunkturbelebungsgesetz 2009 - KBG 2009“)
 Provisions for thermal insulation of industrial premises
and private buildings (put into effect on 14 April 2009)
Business Cycle Stimulation Law 2008:
range of amendments to economic assistance legislation,
in particular laying down
an increase of back-guarantees for tourism and leisure
industry from € 750 million to € 1.5 billion and for nontourism industries from € 4.175 million to € 6.725 million
possibility of acquisition of direct participation in SME
Business Cycle Stimulation Law 2009:
• amendments to tax legislation, in particular laying down
a pre-depreciation rate of 30 %
• a premium of € 1,500.- for every car older than 13 years
being sold for scrap on condition of purchasing a new
car meeting specific environmental standards
SUBSIDIZATION OF THERMAL INSULATION
• Budget:
€ 100 million, € 50 mio. each
for the private and the commercial sector
• Eligible costs:
energy saving adaption of buildings
• Intensities:
40 % for enterprises
20 % for private households
• Form of aid:
cash grant of a maximum of € 5,000.per beneficiariy
PROCEDURAL STEPS UNDER THE “TEMPORARY
FRAMEWORK” SO FAR
 Notification of a package to EC at the end
of January 2009
 Adoption of measures under the € 500.000,- rule
on 20 March
 Adoption of exceptions for risk capital aid on 26 March
PROCEDURAL STEPS FORESEEN
 Additional information on specific conditions
for guarantees unter point 4.3.2 of the Framework
 Clarification of need for the application of conditions
for interest rate subsidies and aid for “green products”
 No use of flexible “Escape Clause” in export credit
insurance
IMPLEMENTATION OF TEMPORARY STATE AID
• Indicative total budget of € 300 million for all
interventions in two years
• Inception of flexible provisions either as a separate
guideline or by integrating the stipulations into existing
schemes
• Application of provisions at all administrative levels,
i. e. national, regional and local levels
• Particular focus will be placed on guarantees for
financing both investment and operating expenses
at current accounts
• Utilization of exception for aid to firms in difficulty
limited to cases wich positive gong-concern perspective
ASSESSMENT OF RULES
Time for inception:
realization in short notice possible
Period of validity:
appropriate at preliminary view
Scope of instruments: lump sum aid offering broad variety
Technical flexibility:
impositions for guarantees
Administrative
requirements:
monitoring within existing system;
adaption of cumulation surveillance
Expected results:
better access to credit financing
through risk sharing between
public intermediaries and banks
EVALUATION OF TEMPORARY AID MEASURES
reporting obligation for MS by 31 October 2009
data collecting in the course of annual reporting
in-depth statistical analyses
RELEVANT INDICATORS FOR EVALUATION
 liquidity available and credit volume provided
 credit conditions offered
 refinancing parameters
 number of insolvencies
 development of growth rates