Press Release: State aid: Commission approves Danish state support scheme for banks

The European Commission approved under EC Treaty state aid rules a Danish scheme aimed at restoring confidence in the Danish financial markets in order to remedy a serious disturbance in the economy of Denmark. The scheme would provide liquidity facilities for banks operating in Denmark and protect depositors and ordinary creditors in case of insolvency. The Danish authorities notified the measure on 8 October and it was approved within two days by the Commission under a new simplified procedure for emergency rescue measures. The Commission found the scheme to be compatible with EU state aid rules because it is the most appropriate means to address the risk of a severe disturbance in the Danish economy, while keeping potential distortions of competition to a minimum through effective safeguard mechanisms. The Commission took into particular account that the guarantee scheme is limited to fundamentally sound financial institutions while insolvent banks need to be immediately unwound, that it is open to all banks established in Denmark but that it requires a significant financial contribution which ensures that an adequate premium is paid for the guarantee. Moreover, the scheme ensures that the participating banks can neither on an individual nor on an aggregate level significantly expand their activities, as measured against established benchmarks The scheme will be remain in force for two years.