STATE AID DAY Office for the Protection of Competition

FINANCIAL AND REAL ECONOMY CRISISAND STATE AID

Roland SchachlFederal Ministry of Economy, Family and YouthUnit 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

01020304050607080

Guarantees (75 %)

CapitalInjections

(15 %)

SavingAccounts'

Safeguard (10 %)

€ billion

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

Financial Market Stabilization

Guarantees for the issue of securities

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 non-

tourism 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