Einde inhoudsopgave
State aid to banks (IVOR nr. 109) 2018/8.7.2
8.7.2 Step-up clause
mr. drs. R.E. van Lambalgen, datum 01-12-2017
- Datum
01-12-2017
- Auteur
mr. drs. R.E. van Lambalgen
- JCDI
JCDI:ADS588231:1
- Vakgebied(en)
Financieel recht / Europees financieel recht
Mededingingsrecht / EU-mededingingsrecht
Voetnoten
Voetnoten
Point 31 of the Recapitalisation Communication.
Portuguese recapitalisation scheme, N556/2008, 20 May 2009, para. 29 and 80. NB: this applied to recapitalisations where there was no significant participation of private investors.
Slovak bank support scheme, N392/2009, 8 December 2009, para. 15 and 64.
Recapitalisation of credit institutions in Greece under the Financial Stability Fund, N328/ 2010, 3 September 2009, para. 29 and 63.
Polish recapitalisation scheme, N302/2009, 21 December 2009, para. 19 and 56.
Finnish recapitalisation, N329/2009, 11 September 2009, para. 41-42.
Swedish recapitalisation scheme, N69/2009, 10 February 2009, para. 42.
A step-up clause means that the remuneration (that the beneficiary bank has to pay to the State) increases over time. This is a powerful incentive for beneficiary banks to pay back the injected capital. It is therefore welcomed by the Commission.1
A step-up clause can be designed in several ways, as is illustrated by the following four examples:
The Portuguese recapitalisation scheme contained a step-up clause: each year, the remuneration rate would increase by 50 basis points until the injected capital was reimbursed.2
The Slovak scheme provided for an increase by 50 basis points in the fourth year after the capital injection, and by 100 basis points in the fifth year after the capital injection.3
The Greek FSF recapitalisation scheme contained a special step-up clause. The preference shares were supposed to be redeemed within five years. If that five-year had lapsed and the redemption of the preference shares had not been completed, an annual cumulative surcharge of 2% was to be charged.4
The Polish scheme included a step-up factor, which was calculated as(1+2*Lombard rate)n, where n indicated the length of the State engagement in years.5
The Finnish recapitalisation scheme – which was described in section 8.6.3 – did not include a step-up clause. However, the remuneration rate was very high. The Commission therefore concluded that there was no prima facie need for exit incentives.6 The Commission went on to consider that Finland had committed to provide information on the path to exit.
Similarly, in the case of the Swedish recap scheme, the Commission concluded that there was no prima facie need for exit incentive, because – as explained in section 8.6.3 – there was a significant participation of private investors which meant that the remuneration was market-oriented.7 This consideration is in line with point 21 of the Recapitalisation Communication which indicates that there does not appear to be any need for exit incentives, in case of a significant participation of private investors.