EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 14 July 2009 
on the State recapitalisation scheme 
(CON/2009/58) 
 Introduction and legal basis
 
On 30 June 2009 the European Central Bank (ECB) received a request from the Swedish Ministry of 
Finance for an opinion on a draft ordinance (her einafter the ‘amending ordinance’) amending the 
Ordinance on capital contributions to solvent ba nks and others (SFS 2009:46) (hereinafter the 
‘Ordinance’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the sixth indent of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the amending ordinance relates to rules applicable to financial institutions 
insofar as they materially influence the stability of fi nancial institutions and markets. In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1.  Background 1.1 On 16 February 2009 the ECB received a request  from the Swedish Ministry of Finance for an 
opinion on a draft of the Ordinance, which entered into force on 17 February 2009. Because of the 
late consultation by the Swedish Ministry of Finance, the ECB did not issue an opinion. 
1.2 Furthermore, the ECB established that the Ordina nce fell within the scope of the second indent of 
Article 105(4) of the Treaty and the sixth indent of Article 2(1) of Counc il Decision 98/415/EC and 
reminded the Swedish authorities of their obligatio n to consult the ECB on draft legislation at a 
stage in the legislative process that allows su fficient time to take into account its views. 
 2. Purpose of the Ordinance  When the Ordinance was adopted, the Swedish Ministry of Finance stat ed in a memo accompanying the 
proposal that the main aim was to guarantee that Swedish companies would have continued access to 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2 finance. Due to the shock to global credit markets a nd its transmission into the national financial system, 
a lack of capital and credit had emerged in Sweden . This threatened to undermine the financing of 
companies of all sizes, an effect that could have stifled economic activity as a whole. 
 3.  Purpose of the amending ordinance 
The amending ordinance’s purpose is to extend the validity of the Ordinance by six months, from 
17 August 2009 until 17 February 2010. 
 4. General observations 4.1 Due to the late consultation by the Swedish Mini stry of Finance in February, the ECB has not until 
now provided an opinion on the Ordinance itself. Moreover, as the ECB has issued a number of 
opinions at the request of the competent authorities of various Member States on national measures adopted in response to the global financial crisis, th e consulting authority is invited to consider the 
relevant observations made in the ECB’s recent opi nions on similar draft legislative provisions in 
other Member States
2. 
4.2 The ECB also draws the consulting authority’s a ttention to the guidance provided by the Ecofin 
Council to the Member States in the conclusions of its Meeting of 7 October 20083, as well as the 
Declaration issued by the Heads of State of the euro area on 12 October 2008 (hereinafter the 
‘Declaration’)4. In particular, the ECB emphasises that an y initiatives put in place by the competent 
national authorities to restore confidence in the fi nancial markets should be  coordinated and should 
aim to implement the common principles in question,  in a spirit of close cooperation with other 
Member States and the Community institutions5. The principles contained in the Declaration, as 
well as the conclusions raised by the Ecofin C ouncil, were endorsed by the European Council of 
15 to 16 October 20086. Moreover, measures taken by competen t national authorities in relation to 
financial institutions in the context of the current  global financial crisis have been the object of 
                                                 
2 
 All ECB opinions are available on th e ECB’s website at www.ecb.europa.eu. 
3 
 See ‘Immediate Responses to Financial Turmoil’, Ecofin Council Conclusions of 7 October 2008, available on the former 
French Presidency’s website at www. ue2008.fr. The Ecofin Council recommended that: (i) interventions should be 
timely and the support should in pr inciple be temporary; (ii) the interests of taxpayers should be protected; (iii) existing 
shareholders should bear the due conseque nces of the intervention; (iv) the Gove rnment should be in a position to bring 
about a change of management; (v) management should not retain undue be nefits; (vi) governments may have, inter alia , 
the power to intervene in remuneration; (vii) legitimate intere sts of competitors must be protected, in particular through 
the State aid rules; and (viii) negative spill-over effects should be avoided.  
4  The text of the Declaration is available on the former Fren ch Presidency’s website at www. ue2008.fr. The Member States 
agreed to: (i) ensure appropriate liquid ity conditions for financial institutions; (ii) facilitate the funding of banks; 
(iii) provide financial institutions with additional capital resources to continue to ensure the proper financing of the 
economy; (iv) allow for an efficient recapitalisation of distressed banks; (v) ensure su fficient flexib ility in the 
implementation of accounting rules; and (vi) enhance cooperation procedures am ong European countries. 
5  See Opinion CON/2009/12. 
6   See Brussels European Council of 15 to 16 October 2008, paragraph 3 of the Presidency Conclusions. 
3 further coordination at European Union level7. As a general remark in this context, the ECB, in line 
with its previous opinions8, notes the importance of putting a transparent and predictable 
framework in place by defining the terms and conditi ons for financial institutio ns to have recourse 
to it and the parameters of and limitations to th e exercise by the authorities of their powers when 
deciding whether to apply such aid measures. 
4.3 The ECB further notes that recapitalisation measures in the Member States should aim to 
strengthen the capital position of f undamentally sound financial institu tions in order to improve the 
functioning and stability of the banking system and ensure the proper financ ing of the economy. In 
particular, there should be a consistent approach to defining the conditions for recapitalisations and 
the pricing of the instruments intended to provide  Tier 1 capital to financial institutions. The ECB 
underlines the importance of appropriate pricing for recapitalisations with a view to enhancing the 
stability of the financial system, facilitating a re turn to normal market conditions, and ensuring a 
level playing-field and the proper financing of the economy.  
4.4 Against this background, recomme ndations were issued by the Governing Council on the pricing of 
recapitalisations on 20 November 2008. The ECB high lights that the pricing conditions for capital 
support should be risk-based and market-oriente d, determined on the basis of the costs of a 
corresponding guarantee in the market by taking in to consideration the specific risk of both the 
specific instrument chosen for in jecting capital and the institution concerned. Specific features of 
the instruments for capital injections (such as pref erence shares) should be appropriately chosen so 
that, while encouraging an early end to the Stat e’s capital support of banks, they should not result 
in an excessive increase in the cost of capital. In line with the Declaration, the ECB also 
emphasises that harmonisation regarding the e xpiry of national financial support schemes 
throughout the EU, and in particular within the eu ro area, is of crucial importance, including in 
relation to State capital investments in financial institutions. Finally, the ECB notes that the Declaration clearly draws attention to the need for any national support scheme to be temporary in 
nature, even if it may be extended or renewed.  The ECB therefore recommends including specific 
provisions on time limits when stabilisation aid measures are adopted
9. 
 
                                                 
7  Communication from the Commission — The application of State aid rules to meas ures taken in relation to financial 
institutions in the context of the current global financia l crisis (OJ C 270, 25.10.2008, p. 8); Communication from the 
Commission — The recapitalisation of fina ncial institutions in the current financial crisis: limitation of aid to the 
minimum necessary and safeguards against undue dist ortions of competition (OJ C 10, 15.1.2009, p. 2); 
Recommendations of the Governing Council of the European Central Bank on government gua rantees for bank debt and 
Recommendations of the Governing Council of the European Ce ntral Bank on the pricing of recapitalisations, both latter 
documents available on the ECB’s website at www.ecb.europa.eu.  
8  See paragraph 3.1.2 of Opinion CON/2009/18. 
9  See paragraph 3.3 of Opinion CON/2008/76 or paragraph 2.3 of Opinion CON/2009/6. 
4 5. Specific observations 
The ECB notes that, in a decision dated 10 February 2009 taken under the Treaty’s State aid rules, the 
European Commission approved this Swedish recapitalisation scheme10. The scheme was found to be in 
line with the Commission’s guidance on support measures for banks during the financial crisis, since the 
measures were limited in time and required a signifi cant proportion of private investment alongside the 
State intervention. The Commission concluded that the scheme was an adequate means to remedy a 
serious disturbance of the Swedish economy and, as su ch, was compatible with Article 87(3)(b) of the 
Treaty. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 14 July 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
10  State Aid Case No N 69/2009; decision av ailable on the European Commission’s website at 
http://ec.europa.eu/competition/state_aid/register/.