Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200812/20081224/article_385599.htm
EU backs British bank-support measures
Created: 2008-12-24
THE European Commission has approved modifications to Britain's support measures for the bank sector, initially approved by the commission on October 13, the European Union executive arm said in a statement yesterday.
The changes mainly concern the fee payable on guaranteed liabilities and the widening of the range of currencies in which the guaranteed instruments can be issued, it said.
The modifications will bring the British scheme in line with those in other member states and support the provision of credit to Britain's economy.
"The commission therefore concluded that the United Kingdom support measures, as amended, are compatible with the common market," the statement said.
From the start of next year, Britain will guarantee debt issued in Japanese yen, Australian dollars, Canadian dollars and Swiss francs. Until now, eligible debt was limited to instruments in pound sterling, United States dollars or euros.
The fee payable on guaranteed liabilities will be based on a per annum rate of 50 basis points plus 100 percent of the institution's median five-year Credit Default Swap spread between July 2, 2007 and July 1, 2008, the commission said. This fee will apply retrospectively to all guaranteed issues under the original scheme since its launch on October 13, 2008.
As in the original plan, the initial term of the instruments guaranteed under the amended scheme will be no longer than three years.
But participating institutions will now be able to roll over the guarantee on some individual instruments for an additional two years.
The proportion of the guaranteed liabilities that can be rolled over cannot exceed one-third of the guaranteed liabilities, the commission said.
The changes mainly concern the fee payable on guaranteed liabilities and the widening of the range of currencies in which the guaranteed instruments can be issued, it said.
The modifications will bring the British scheme in line with those in other member states and support the provision of credit to Britain's economy.
"The commission therefore concluded that the United Kingdom support measures, as amended, are compatible with the common market," the statement said.
From the start of next year, Britain will guarantee debt issued in Japanese yen, Australian dollars, Canadian dollars and Swiss francs. Until now, eligible debt was limited to instruments in pound sterling, United States dollars or euros.
The fee payable on guaranteed liabilities will be based on a per annum rate of 50 basis points plus 100 percent of the institution's median five-year Credit Default Swap spread between July 2, 2007 and July 1, 2008, the commission said. This fee will apply retrospectively to all guaranteed issues under the original scheme since its launch on October 13, 2008.
As in the original plan, the initial term of the instruments guaranteed under the amended scheme will be no longer than three years.
But participating institutions will now be able to roll over the guarantee on some individual instruments for an additional two years.
The proportion of the guaranteed liabilities that can be rolled over cannot exceed one-third of the guaranteed liabilities, the commission said.
Agencies
Copyright © 2001-2009 Shanghai Daily Publishing House