EN ECB-P UBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 13 October 2011 
on a State guarantee covering certain loans gran ted to Dexia SA and Dexia Crédit Local SA 
(CON/2011/79) 
 Introduction and legal basis
 
On 12 October 2011, the European Central Bank (ECB)  received a request from the Nationale Bank van 
België/Banque Nationale de Belgique  (NBB), acting on behalf of the Belgian Ministry of Finance, for an 
opinion on a draft royal decree granting a State guara ntee covering certain loans granted to Dexia SA and 
Dexia Crédit Local SA (hereinafter the ‘draft ro yal decree’). The ECB was requested to deliver an 
opinion under extremely urgent circumstances. 
The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, since the draft royal decree relates to ru les 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.  Purpose of the draft royal decree 
1.1  Article 36/24 §1 of the Law of 22 February 1998 establishing the Organic Statute of the Nationale 
Bank van België/Banque Nationale de Belgique
2 empowers the King, on advice from the NBB, to 
adopt certain measures, including notably the establishment of a system to grant a State guarantee covering liabilities entered into by certain supervised  institutions or covering certain claims held by 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  This provision was originally adopted as Article 117 bis of the Law of 2 August 2002 on the supervision of the financial 
sector and on financial servic es, whose substance was transferred to the La w of 22 February 1998 NBB in the context of 
the recent reform of the Belgian supervisory architecture.  The ECB issued the following two opinions on this reform: 
CON/2010/7 and CON/2011/5. ECB Opini on CON/2008/50, paragraph 2.1 comment ed on an early draft of the 
empowering clause. All ECB opini ons are available on  the ECB’s website at www.ecb.europa.eu. 
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2 these institutions3 in the event of a sudden crisis in the financial markets or a serious threat of a 
systemic crisis and, if the measures are taken, to limit the scale or effects thereof4.  
 The draft royal decree is based on this empowering provision and is motivated by the need, given 
the current turbulence in the international financia l markets, to take certain measures to safeguard 
the stability of and confidence in the Belgian fina ncial system. These measure s consist in the setting 
up of a guarantee scheme covering particular loans of certain entities of the Dexia group in the context of the group’s restructuring
5.   
1.2  Under the draft royal decree, the Belgian Stat e will guarantee loans granted to Dexia SA and/or 
Dexia Crédit Local SA by other credit institutions or professional counterparts6, up to a maximum 
principal amount of EUR 54 450 000 0007. The guarantee will only apply for loans issued until 
31 December 2021 at the latest and having a maturity of maximum 10 years8. The guarantee will be 
payable at first demand9 and its remuneration is to be dete rmined by the Minister for Finance10. 
 The entry into force of the State guarantee will be conditional on the Minister for Finance entering 
into one or several agreement specifying certa in aspects of the arrangement, notably: (i) the 
identification of the guaranteed loans11; (ii) Dexia SA and Dexia Crédit Local SA’s undertaking to 
pay the remuneration agreed for the guarantee and to implement any measure aimed at restoring their solvability deemed useful  by the Minister for Finance
12; (iii) the duration of the guarantee and 
events causing the guarantee to expire13 14. 
 2.  General observations  
It is important to ensure that the draft royal decree and any subsequent implementing measures fully 
comply with the relevant provisions of Union law,  including competition and State aid rules. In this 
                                                 
3  See in particular Article 36/24, §1, 2° of the Law of 22 February 1998. 
4  Belgium has consulted the ECB on seven other draft legi slative provisions adopted in this context: (i) Opinion 
CON/2008/46; (ii) Opinion CON/2008/50; (iii) Opinion CON/2008/61; (iv) Opinion CON/2008/74; (v) Opinion 
CON/2009/25; (vi) CON/2009/29 and (vii) CON/2009/73. 
5  See the references to the safeguard of the stability of the Belgian financial system in recital 3 of the draft royal decree.  
6  Article 1 of the draft royal decree.  
7  Article 2 of the draft royal decree. In addition to the principal, the guarantee also covers interests and ancillary costs, 
which are not subject to the EUR 54 450 000 000 ceiling. 
8  Article 2 of the draft royal decree. The categories of ‘pro fessional counterparts’ that are e ligible for the guarantee are to  
be identified by the Minister for Finance in a further contract or regulation. 
9  Article 3 of the draft royal decree. The eligible beneficiar ies will need to provide a precise justification of the amounts 
concerned and declare that these amounts are payable and unpaid. 
10 Article 4 of the draft royal decree. 
11  Article 5, 1° of the draft royal decree.  
12  Article 5, 3° and Article 5,  4° of the draft royal decree. 
13  Article 5, 5° of the draft royal decree. 
14  The following will also need to be specified in the agreements : (i) whether the guarantee is assignable (Article 5, 6° of 
the draft royal decree); (ii) the arrangements ensuring subroga tion and compensation of the Belgian State in the event of a 
call on the guarantees, and any possible related security (Article 5, 7° of the draft royal decree); (iii) the arrangements for  
informing the State of the development of the guaranteed loans (Article 5, 8° of the draft royal decree; (iv) the pay out 
deadlines (Article 5, 9° of the draft royal decree), as well as (v) any other provision deemed  useful by the Minister for 
Finance (Article 5, 10° of the draft royal decree). 
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3 respect, it is essential that Member States comply with  the guidance given by the European Commission 
in its communications on the application of State ai d rules to support measures in favour of banks and 
government guarantee schemes covering bank debt15, including with regard to the temporary nature of the 
acceptability of such aid measures and the necessity for credit institutions receiving State support to 
submit a restructuring plan. 
 3. Interaction of the draft royal decree with  the monetary policy of the euro area  
The draft royal decree does not define the type of liabilities falling within the meaning of ‘loans’ under 
Article 1 of the draft royal decree since they will be de fined in the agreement(s) referred to in Article 5 of 
the draft royal Decree. In this respect, the ECB makes the following observations.  
First, it reminds the consulting authority that g overnment guarantees for bank debt should, when 
practically implemented: (i) address the funding pr oblems of liquidity-constrained solvent banks by 
improving the functioning of the market for bank debt  of longer-term maturity; (ii) preserve the level 
playing field among financial institutions and avoid mark et distortions; and (iii) ensure consistency in the 
management of Eurosystem liquidity. In this vein, government guarantees on short- term bank debt with a 
maturity of three to 12 months may be provide d to revitalise the short-term bank debt market
16. In this 
regard, the ECB reiterates that granting government gua rantees for bank debt with a maturity of less than 
three months should be avoided to the extent possible17.  
Second, it is also stressed that it is of the utmost  importance that support opera tions conducted by national 
authorities do not in any way affect the conduct and the implementation of monetary policy in the euro area
18. In this context, the ECB reiterates its view th at the extension of the State guarantee to cover 
interbank deposits should be avoided19, as this could entail substantial distortion in the various national 
segments of the euro area money market by potentiall y increasing short-term debt issuance activity across 
Member States and therefore impairing the implementa tion of the single monetary policy, which is an 
exclusive competence of the Eurosystem under Article 127(2) of the Treaty20. It could also affect the 
                                                 
15  See notably the Communication from the Commission on the a pplication, from 1 January 20 11, of State aid rules to 
support measures in favour of banks in  the context of the financial crisis , (OJ C 329, 7.12.2010, p. 7); the DG 
Competition Staff Working Document - The application of St ate aid rules to government guarantee schemes covering 
bank debt to be issued after 30 June 2011, published on the Commission’s website at www.ec.europa.eu; the 
Communication from the Commission – The application of State aid rules to measures taken in relation to financial 
institutions in the context of the current global financial crisis (OJ C 270, 25.10.2008, p. 8); the Eurosystem’s Guiding 
principles for bank asset support sche mes, 25 February 2009; and Commission Communication of 25 February 2009 on 
the treatment of impaired assets in the Community banking sector (OJ C 72, 26.3.2009, p. 1). See furthermore in this 
context the Recommendations of the Governing Council of the European Central Bank on  government guarantees for 
bank debt, 20 October 2008.  
16 CON/2009/73, paragraph 3.1, CON/2009/12, pa ragraph 3.3, CON/2009/49, paragraph 3.9. 
17  CON/2009/92, paragraph 3.5. 
18 CON/2009/73, paragraph 3.1, CON/2009/12, pa ragraph 3.2, CON/2009/92, paragraph 3.5 . 
19  CON/2009/73, paragraph 3.1, CON/ 2009/49, paragraph 3.9, CON/2008/50, pa ragraph 3.2, CON/2009/12, paragraph 
3.3.2. 
20  CON/2009/73, paragraph 3.1, C ON/2009/49, paragraph 3.9, CON/2009/12 , paragraph 3.3.2 and CON/2008/48, 
paragraph 3.7. 
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4 transmission of monetary policy decisions21 and make it difficult to maintain the necessary level playing 
field in the euro area between the financial institu tions benefiting from the State guarantee and those not 
benefiting.  
 4.  Temporary nature of the scheme  Also in line with the guidance given by the Commission on 30 June 2011
22, the ECB notes the need for 
national support measures to be temporary in nature23. It is understood that the support scheme covers a 
time period of up to 20 years, as the loans covere d by the guarantee may be issued until 31 December 
2021 at the latest and may be for a maximum duration of 10 years, and thus could be considered of a 
longer-term rather than temporary nature.  
 5.  Pricing of the guarantee As for Article 4 of the draft royal decree, the EC B underlines that, for the Minister of Finance to 
determine the remuneration due to the State for th e guarantee, the pricing formula recommended by the 
Governing Council on 20 October 2008 s hould be taken into consideration. This was also supported by 
the Commission in its guidance related to the application of State aid rules to government guarantees of 2011. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 13 October 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
21  CON/2009/73, paragraph 3.1, CON/2009/12, para graph 3.3.2, CON/2009/49, paragraph 3.9. 
22  DG Competition Staff Working Document - The application of  State aid rules to government guarantee schemes covering 
bank debt to be issued after 30 June 2011, published on the Commissi on’s website at www.ec.europa.eu. 
23  CON/2009/73, paragraph 3.2, CON/2009/24, pa ragraph 3.1, CON/2009/54, paragraph 2.5.2.