More special State financing for UK banks

HM Treasury announcement (about 2 pages) that it will offer additional State-funded loans, loan guarantees and equity capital financing (through preference shares) to UK banks and building societies (including UK branches of foreign banks).

The statement says that the European Commission has been informed but does not mention any State aid clearance procedures or pre-conditions. All the new forms of funding appear to have been structured in a way that makes it arguable that the Government and the Bank of England are acting as market investors, and therefore that there is no State aid. For example, (unspecified) fees will be charged for loan guarantees.

The European Commission has announced an intention to publish a policy document on its approach to State aid analysis for bank rescues.

For further information or advice please contact Franck Latrémolière.

Filed under HM Treasury, State aid.

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