Press Release: State aid: Commission authorises French scheme to inject capital into certain banks

In accordance with the state aid rules of the EC Treaty, the European Commission gave the go-ahead to a capital-injection scheme for banks designed by France to stabilise the financial markets, restore confidence and enable French banks to increase lending to the real economy. This scheme complements the French refinancing scheme approved by the Commission on 30 October and introduced proper safeguards to limit distortions of competition. The Commission focused on the level of remuneration payable to the state for the capital injected and on the establishment of mechanisms to ensure that the state's involvement in the banks' capital is as brief as possible. As a result the French authorities adjusted the level of remuneration and introduced a mechanism for the payment of a premium on the capital being reimbursed, enabling this objective to be achieved. These safeguards will encourage the beneficiary banks to turn to private operators as soon as conditions permit and thereby prevent any crowding-out effect on the capital markets. These conditions are essential if state intervention is to be kept to what is necessary to restore confidence on the financial markets. The Commission therefore decided that the scheme is an appropriate, necessary and proportionate means of remedying a serious disturbance in the French economy. It is, therefore, compatible with the rules on state aid (Article 87(3)(b) of the EC Treaty), as explained in the Communication on how these rules apply to banks during the crisis.