91999E1978

WRITTEN QUESTION E-1978/99

by Ursula Schleicher (PPE-DE) to the Commission

(5 November 1999)

Subject: Draft Commission communication on the application of Articles 92 and 93 of the EC Treaty to state aid in the form of loan guarantees

The draft communication forwarded to the Member States in January 1999 has created widespread uncertainty in the credit sector. Publication of this communication has substantially undermined the sector's confidence in a guarantee instrument with legal certainty. It would result in savings banks and other banks granting credits being unable to take up such credit guarantees, with the result that retroactively they would have to assume without any prior warning the insolvency risk of businesses in receipt of loans.

1. Does the Commission really intend to issue this communication?

2. In what way will the legitimate expectations of credit institutions be guaranteed?

3. What action will the Commission take to counter the considerable uncertainty experienced by actors on the financial market

4. Is the Commission aware that in critical instances the credit institutions would dispense with a state guarantee for their loans, with the result that the state would have to directly finance loans eligible for aid and hence the fiscally beneficial effect of simply proving a loan guarantee would no longer apply?

5. Given the confusing plethora of communications, guidelines and ad hoc decisions concerning subsidies, does the Commission intend to create greater transparency and legal certainty by publishing a comprehensive and systematic overview of the law on European subsidies?

Answer given by Mr Monti on behalf of the Commission

(6 December 1999)

1. On 24 November 1999 the Commission adopted the notice on the application of Articles 87 and 88 (formerly Articles 92 and 93) of the EC Treaty to state aid in the form of guarantees.

2. The communication should not undermine the confidence of credit institutions, It is intended solely to clarify the rules applicable to aid in the form of guarantees.

3. The precise objective of the communication is to increase transparency and, in so doing, help mitigate the uncertainty felt by actors on the financial markets.

4. The Commission is not seeking to prohibit guarantees but simply to ensure their conformity with the aid rules.

5. The notice is designed to achieve greater transparency of rules hitherto contained in various texts.