Press Release: Commission extends bank guarantee scheme in Germany and recapitalisation scheme in Hungary

The European Commission has extended until the end of 2010 a rescue scheme for credit institutions in Germany. The extended scheme features higher premiums to be paid by the banks for the guarantees granted by the State. This is to encourage banks to finance themselves without state support and to limit distortions of competition. The Commission also extended until 31 December the Hungarian recapitalisation scheme for credit institutions. The vast majority of the loan guarantee, recapitalisation and other schemes, put in place at the end of 2008 to ensure financial stability at the height of the financial crisis, expire in June 2010. The Commission announced that for the guarantee schemes to be extended the fee charged by the government needs to be increased and that the banks that continue to rely heavily on them should undergo a viability review. EU finance ministers agreed with this approach.

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