On 29th June, in Brussels, the European Commission reported that it had authorised an extension of the Polish bank recapitalisation scheme to 31st December 2012. The scheme, which was initially approved on 21st December 2009 (IP/09/253) in response to banking problems in Hungary, has been extended in the past (5th July 2010, 16th December 2010 (MEX/10/1216), 28th June 2011 (MEX/11/0628) and 27th February 2012 (MEX/12/0227)). At the time Neelie Kroes, Vice-President of the European Commission, said, "The Hungarian scheme provides effective means for strengthening confidence in the markets and, above all, for financing the real economy in a period of crisis, while at the same time establishing safeguards to limit distortions of competition". (IP/09/253)

The Commission found that the extension is in line with its guidance on state aid for banks during the banking crisis, and in this instance, concluded that the measures are well targeted and limited in time and scope. The scheme, which is compatible with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), should help remedy the serious disturbance in the Polish economy.

"The European Commission has published guidance on how Member States can best support financial institutions in the current financial crisis whilst respecting EU state aid rules and so avoiding excessive distortions of competition. The guidance is based in particular on EC Treaty rules allowing for aid to remedy a serious disturbance in the economy of a Member State (Article 87.3.b of the EC Treaty). The guidance will help Member States to put in place coordinated concrete measures to restore confidence in financial markets in accordance with the 12th October Eurogroup declaration. EU state aid rules require that measures taken do not give rise to disproportionate distortions of competition, for example by discriminating against financial institutions based in other Member States and/or allowing beneficiary banks to unfairly attract new additional business solely as a result of the government support. Other requirements include that measures must be limited in time and foresee adequate contributions from the private sector. The Commission will aim to approve schemes that comply with this guidance very quickly (within 24 hours, if possible)." (IP/08/1495)

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