3 Issuing costs of state guaranteed bonds - Financial Risk and ...

Annex 1 Eligibility criteria for state guarantees
A1.1.2 Germany 23
Implementation date of scheme
18 October 2008
End date of entry into scheme
28 April 2009
End date of scheme
31 December 2009
Fee for instrument
In line with the rates approved by the EU Commission in the Communication 'The recapitalisation
of financial institutions in the current financial crisis: limitation of aid to the minimum necessary
and safeguards against undue distortions of competition' 24
Maximum tenor
5 years
Institution criteria
Institutions that can be involved in the scheme include German credit institutions, financial service
providers, insurance companies, pension funds, investment management companies, operators of
securities and commodities exchange and certain parent companies of the aforementioned
entities. SoFFin has imposed the following duties on eligible institution: (1) obligation on
shareholders to recapitalise the relevant eligible institution, (2) the provision of a restructuring
plan, (3) adjustment of the business model and spin-off of bad assets to ensure the long-term
survival of the eligible institution
Instrument eligibility
Only non-complex securities are eligible and only securities denominated in Euros unless SoFFin
can hedge its currency exposure with the relevant eligible institution bearing the associated costs.
Scale of scheme
€400 billion
23
For details see:
http://www.linklaters.com/pdfs/publications/capitalmarkets/StateGuaranteesGuide.pdf ;
http://www.mayerbrown.com/publications/article.asp?id=7848&nid=6 .
24 http://ec.europa.eu/competition/state_aid/legislation/recapitalisation_communication.pdf
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