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Danish guarantee scheme on bank merger liabilities approved under EU state aid rules

By  |  February 18, 2012

The European Commission has approved a DKK 50 billion (approximately €6.7 billion) Danish guarantee scheme on liabilities for merging banks in Denmark.

The scheme provides state guarantees on merger liabilities for any bank established in Denmark (including subsidiaries of foreign banks) if one of the merging banks is, or is likely to become, distressed. However, the merged entity must be found viable by the Danish Financial Supervisory Authority, and if its total balance sheet exceeds €3 billion, the European Commission will be notified for state aid scrutiny.

The Commission has found the scheme to be compatible with EU state aid rules, given the market failures that small Danish banks encounter in funding mergers.

Source: European Commission

 

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