Bankers want Juncker Plan cleared of state aid rules

Financial Mirror (Cyprus) - - FRONT PAGE -

Euro­pean Union rules ban­ning state aid to busi­nesses should not ap­ply to guar­an­tees is­sued to boost in­vest­ment un­der the three-year EU in­vest­ment scheme, some of the key con­trib­u­tors to the plan said on Mon­day, ac­cord­ing to the EU news and pol­icy site EurAc­tiv.

The Euro­pean In­vest­ment Bank (EIB) and the EU’s main na­tional pro­mo­tional banks, in­clud­ing Ger­many’s KfW and France’s Caisse des Dépôts, ex­pressed their view in a let­ter to be ad­dressed to the Euro­pean Com­mis­sion.

The let­ter said public guar­an­tees should be avail­able be­low mar­ket prices to make the in­vest­ment plan of Com­mis­sion Pres­i­dent Jean-Claude Juncker work, said Franco Bas­sanini, head of Italy’s pro­mo­tional bank Cassa De­positi e Prestiti.

“Were th­ese guar­an­tees con­sid­ered as il­le­gal state aid, we can for­get about the Juncker plan,” Bas­sanini told jour­nal­ists, ar­gu­ing that the riskier projects funded with the plan needed favourable treat­ment or would be shunned by in­vestors.

Jyrki Katainen, the Com­mis­sioner in charge of the plan, said that talks were on­go­ing to clar­ify how state aid rules would ap­ply to the Juncker Plan, an in­vest­ment scheme in­tended to use lever­age to gen­er­ate EUR 315 bln of in­vest­ment in Europe over three years.

Na­tional pro­mo­tional banks of Ger­many, France, Italy, Spain and Lux­em­bourg, have said they would be ready to con­trib­ute bil­lions of eu­ros to projects fi­nanced by the Euro­pean Fund for Strate­gic In­vest­ment (EFSI), the ve­hi­cle to be set up by the Juncker Plan, but only for projects in their own coun­tries.

The Euro­pean Com­mis­sion would have pre­ferred na­tional con­tri­bu­tions to go di­rectly into the EFSI’s cof­fers be­cause that would in­crease the lever­age ef­fect of the fund, which has cap­i­tal of EUR 21 bln.

But con­tri­bu­tions from na­tional pro­mo­tional banks are still im­por­tant for the suc­cess of the plan, be­cause they will de­crease the risk for pri­vate ac­tors when they in­vest in EFSI-spon­sored projects, such as air­ports or broad­band net­works.

The banks fear that with state guar­an­tees priced at mar­ket lev­els and sub­ject to strict state aid rules, risks for pri­vate in­vestors will be too high, re­duc­ing the ap­petite for in­vest­ments.

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