EC Decides to Prolong and Adjust State Aid Temporary Framework
EC decided to prolong, and extend scope, of the State Aid Temporary Framework to support the economy in the context of the COVID-19 outbreak. All sections of the temporary framework are being prolonged for six months until June 30, 2021, except the section to enable recapitalization support, which is being prolonged for three months until September 30, 2021. EC published a communication to amend the State Aid Temporary Framework in the Official Journal of the European Union. Under the EU State Aid Rules, EC also approved two Swedish schemes to support companies affected by the COVID-19 outbreak.
The following are the key amendments to the State Aid Temporary Framework:
- Prolongation of the temporary framework—The temporary framework was initially set to expire on December 31, 2020, except for recapitalization measures that could be granted until June 30, 2021. The amendment prolongs the provisions of the temporary framework until June 30, 2021, except the recapitalization measures that are being prolonged until September 30, 2021. EC will review and examine the need to further prolong or adapt the temporary framework.
- Support for uncovered fixed costs of companies—The amendment introduces a new measure to enable member states to support, during the eligible period, companies facing a decline of at least 30% in turnover (in the context of COVID-19 outbreak) compared to the same period of 2019.
- Exit of the State from previously state-owned companies—EC adapted the conditions for recapitalization measures under the temporary framework, in particular for a member state's exit from the recapitalization of enterprises where the sate was an existing shareholder prior to the recapitalization. The amendment allows the state to exit from the equity of such enterprises through an independent valuation, while restoring its previous shareholding and maintaining the safeguards to preserve effective competition in the Single Market.
- Extension of the temporary removal of all countries from the list of “marketable risk" countries under the short-term export-credit insurance communication—Taking into account the continued general lack of sufficient private capacity to cover all economically justifiable risks for exports to countries from the list of marketable risk countries, the amendment provides for an extension until June 30, 2021 of the temporary removal of all countries from the list of “marketable risk" countries under the short-term export-credit insurance Communication.
Related Links
- Press Release on Temporary Framework
- EC Communication on Temporary Framework
- News on Swedish Schemes
Keywords: Europe, EU, Sweden, Banking, COVID-19, Temporary Framework, State Aid Rules, Credit Risk, EC
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
Bundesbank Reviews Stability of Financial System Amid PandemicRelated Articles
FSB Sets Out Effective Practices for Cyber Incident Recovery
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol
HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.
FSB Sets Out Roadmap for Transition to Alternative Reference Rates
FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).
HM Treasury Publishes Response to Proposal on BRRD2 Transposition
HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).
HM Treasury Publishes Response to Proposal on CRD5 Transposition
HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.
BoE Publishes Reporting Schedule for Statistical Returns
In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.
EC Welcomes Declaration by Member States on EU Cloud Federation
EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.
MAS Amends Notice on Issuance of Covered Bonds by Banks in Singapore
MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.
FDIC Selects Technology Companies for Rapid Prototyping Competition
FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.
GLEIF Defines New Validation Agent Role for Financial Institutions
GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.
