Press Release: State aid: Commission extends Austrian and Latvian bank support schemes

The European Commission has extended until the end of 2010 an aid scheme for credit institutions in Austria and a Latvian bank guarantee scheme. The extended schemes feature higher premiums to be paid by banks to the State for guaranteeing the loans they raise on the market. This is to encourage banks to finance themselves without state support and to limit distortions of competition. The current schemes for the financial sector expire at the end of June 2010. To be extended, the fees charged by government need to be increased and the banks that continue to rely heavily on such guarantees for their financing should undergo a viability review. EU finance ministers agreed with this approach. The Commission has already extended under these conditions bank support schemes in Sweden and Germany. The extensions are for six months, until the end of 2010.