8.8.2 Balance sheet growth limitation

As is indicated in the table in Annex V, several bank support schemes included a balance sheet growth limitation. For instance, the Swedish guarantee scheme provided the following: the aggregate growth in balance sheet volume (of the banks that are participating in the guarantee scheme) may not exceed the highest of the following three percentages: i) the annual rate of growth of Swedish nominal GDP in the preceding year; ii) the average historical growth of balance sheets in the Swedish banking sector during the period 1987-2007; iii) the average growth rate of the balance sheet volumes in the banking sector in the EU in the preceding six months.1

In January 2009, Sweden amended the guarantee scheme. One of the amendments was to repeal the balance sheet growth limitation. Sweden argued that this behavioural constraint was an “unnecessary disincentive for eligible institutions to benefit from the guarantee”.2 The Commission accepted this amendment. In that regard, the Commission referred to footnote 4 (related to point 35) of the Recapitalisation Communication, in which the Commission recognised that balance sheet restrictions were not necessary in recapitalisation schemes of fundamentally sound banks. The same applied to guarantee schemes, unless there is a serious risk of displacement of capital flows between Member States.

Following this new guidance, all Member States that had set up schemes including a balance sheet growth limitation removed this particular behavioural constraint.3