The European Commission has approved, under EC Treaty state aid rules, a German rescue package intended to stabilise financial markets by providing capital and guarantees to eligible financial institutions. Following close cooperation with the German authorities and the submission of a comprehensive set of commitments to ring-fence the application of the measures, the Commission found the scheme to be in line with its Guidance Communication on state aid to overcome the current financial crisis.

The package constitutes an adequate means to remedy a serious disturbance in the German economy while avoiding undue distortions of competition and is therefore compatible with Article 87.3.b. of the EC Treaty. In particular, the package provides for non discriminatory access, is limited in time and scope and foresees adequate safeguards to minimise distortions of competition.

These commitments address important issues raised by the Commission and aim at limiting distortions of competition.

The rescue package consists of:

• A recapitalisation scheme, making available new capital to banks and insurance companies in exchange for shares, to allow them to strengthen their balance sheets against possible losses.
• A guarantee scheme covering new issuances of short and medium term debt, in return for market-oriented remuneration, to support sound banks that are unable to access interbank funding.
• A temporary acquisition of assets under the condition that these assets are bought back after 36 months maximum without the state making a loss.

Germany has made the commitment to renotify the scheme after six months and to report every six months to the Commission on the implementation of the scheme. This will enable the Commission to verify that the measures are not maintained when the financial crisis is over.