EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 22 December 2010 
on the extension of State Treasury support and recapitalisation measures to financial institutions 
subject to a European Commission decision  
(CON/2010/95) 
 
Introduction and legal basis  
On 8 December 2010, the European Central Bank (ECB)  received a request from the Polish Minister for 
Finance for an opinion on a draft law amending the Law on the provision of State Treasury support to financial institutions, the Law amending the Law on th e provision of State Treasury support to financial 
institutions and the Law on recapitalisation of some fi nancial institutions (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 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 Ce ntral Bank by national authorities regarding draft 
legislative provisions
1, as the draft law contains rules applicable  to financial institutions insofar as they 
materially influence the stability of financial ins titutions and markets. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft law 1.1 The draft law amends the following legislation:  (i) the Law of 12 February 2009 on the provision 
of State Treasury support to financial institutions
2 (hereinafter the ‘Law on State support’), on 
which the ECB was consulted at the drafting stage in November 20083; (ii) the Law of 
19 November 2009 on the Law amending the Law on the provision of State Treasury support to 
financial institutions4 (hereinafter the ‘Law amending the Law on State support’) on which the 
ECB was consulted at the drafting stage in October 20095; and (iii) the Law on recapitalisation of 
                                                 
1 OJ L 189, 3.7.1998, p. 42. 
2 Dziennik Ustaw  of 2009 No 39, Item 308. 
3 See Opinion CON/2008/80; all ECB opinions are publis hed on the ECB’s website at www.ecb.europa.eu. 
4 Dziennik Ustaw  of 2010 No 3, Item 12. 
5 See Opinion CON/2009/82. 
2 certain financial institutio ns of 12 February 20106 (hereinafter the ‘Law on recapitalisation’), on 
which the ECB was consulted at the drafting stage in March 20097. 
1.2 The Law on State support introduced a scheme wh ereby various support meas ures were offered to 
eligible financial institutions8. The deadline for applying for support measures under this Law was 
originally set at 31 December 2009 and was sub sequently extended until 31 December 2010 by the 
Law amending the Law on State support. The Law on recapitalisation provides for public intervention instruments to address potential liquidity  or solvency difficulties that may arise in the 
financial market by way of enabling public aut horities to (i) provide a State guarantee for market-
initiated recapitalisation operations, and (ii) initia te compulsory State takeovers of a distressed 
financial institution
9. 
 Under the provisions currently in force, the measures provided for in both the Law on State support 
and the Law on recapitalisation are available until 31 December 201010. 
1.3 According to the explanatory memorandum, the Po lish financial institutions do not currently need 
to use the support foreseen by the abovementione d Laws. At the same time, because of possible 
future financial market changes, it is useful to extend those measures to 2011 subject to the 
European Commission’s consent11. Nevertheless, the draft law does not specify a date until which 
the relevant measures foreseen by the Law on State support and the Law on recapitalisation may be applied. Rather, the draft law repeals the curre nt time limit established by the Law amending the 
Law on State support and provides that the relevant measures may be applied if the European Commission’s declaration of the State aid scheme’ s compatibility with the common market is in 
force on the day of granting this support
12. According to the explanatory memorandum, this would 
allow the temporary character of ‘those provisions  to become permanent’ , whereby the time limit 
for the application of measures would ‘result fro m the fact that the European Commission’s 
consent for the State aid scheme is only issued for a limited period of time’13. 
1.4 The draft law does not change the conditions of support or the criteria by which the eligibility of 
financial institutions is assessed under the Law on State support or Law on recapitalisation. 
 
                                                 
6 Dziennik Ustaw  of 2010 No 40, Item 226. 
7 See Opinion CON/2009/19. 
8 Six categories of financial institutions established in Poland were eligible fo r the support scheme: banks, credit unions, 
investment funds, brokerage houses, in surance companies and pension funds (see  Article 2 of the Law on State support). 
9 See Article 1 of the draft law. See explan atory memorandum to the draft law, p. 1. 
10 See Article 1 of the Law ame nding the Law on State support. 
11 See the explanatory memorandum to the draft law, p. 1, second paragraph. 
12 See Article 2 of the draft law, repeal ing the Law amending the Law on State support and Articles 1 and 3 of the draft law 
amending Article 20 of the Law on St ate support and Article 24 of the Law on recapitalisation, respectively. 
13 See the explanatory memorandum to the draft law, p. 1, third paragraph. 
3 2. The appropriate time to consult the ECB 
2.1 The consulting authority submitted the draft la w to the ECB on 8 December 2010, requesting the 
ECB’s opinion within seven days due to ‘the ur gent character of the matter and the brief and 
uncomplicated content’14 of the draft law.  
2.2 The ECB emphasises that according to Article 3 of the Council Decision 98/415/EC, the authorities 
of the Member States preparing legislative provisi ons may, if they consider it necessary, set the 
ECB a time limit for the submission of its opinion which may not be less than one month. This 
time limit may be reduced only in case of extreme urgency for which the c onsulting authority must 
state the reasons. 
2.3 In view of the above, the ECB emphasises that th e consultation should take place at a point in the 
legislative process which affords the ECB sufficient time to examine the draft legislative provisions 
and to adopt its opinion in all required language versions, and wh ich also enables the relevant 
national authorities to take the ECB’s opinion into consideration before the provisions are adopted.  
 3. Interaction with monetary policy decisions 3.1 Since the draft law will inter alia  extend the application of the support scheme laid down in the 
Law on State support on which the ECB has already been consulted, the ECB reiterates certain 
points in Opinion CON/2008/80, also reiterated in  Opinion CON/2009/82, to the extent they have 
not been incorporated in the Law on State support, and now in the draft law. 
3.2 First, the ECB notes that the Law on State suppor t does not explicitly exclude interbank deposits 
from among the obligations that may be secured w ith a State guarantee. Although the draft law 
amends the Law on State support, the ECB understa nds that it does not include amendments which 
explicitly exclude interbank depo sits. In this respect, the ECB once again reiterates that State 
guarantees for interbank deposits shoul d be avoided as they have the potential to interfere with the 
conduct of the central bank’s liquidity-providing  operations, and thus have an impact on the 
transmission of Narodowy Bank Pols ki’s monetary policy decisions
15. 
3.3 Second, the ECB understands that the Law on St ate support introduces an explicit legal basis for 
the provision of State guarantees securing the repa yment of Narodowy Bank Polski’s refinancing 
credit, including in cases where such credit is provide d as emergency liquidity assistance (ELA). In 
this context, the ECB would like to reiterate16 that, in order to ensure that the extension by national 
central banks of ELA secured by a State guarantee complies with the monetary financing prohibition, it is essential for the State guarantee to cover 100% of the amount of the credit where 
                                                 
14 See second paragraph of the cons ultation letter of 8 December 2010. 
15 See, for example, paragraph 3.2 of Opinion CON/2008/50, paragraph 2.3 of Opinion CON/2008/54 and paragraph 3.2(i) 
of Opinion CON/2008/80. 
16 See paragraph 4.3 of Opinion CON/2008/80. 
4 such guarantee would constitute the sole form of collateral for the ELA operation, and not only up 
to 50% of the amount remaining for repayment, as provided by the Law on State support17. 
 4.  Open-ended measures by referring to a Commission decision  
4.1 The ECB reiterates its view that coordinati on of the duration of national financial support 
schemes across the Union is of crucial importance in  order to ensure a level playing field. In 
addition, the ECB notes the need for national s upport measures to be temporary in nature. 
The ECB is therefore concerned about the Polish authorities’ intention of removing the expiry 
date for the measures foreseen by the Law on St ate support and the Law on recapitalisation, thus 
converting the temporary provisions into permanent provisions
18. As emphasised in the European 
Commission’s Communication, such measures ‘can only be justified as an emergency response to the unprecedented stress in financial markets and only as long as these circumstances prevail’
19.  
4.2 The fact that the European Commission renews its consent to the measures in place from a State 
aid perspective does not render a complete lega l review of the measures unnecessary. Avoiding 
the renewal of a temporary legal regime circum vents the duty to consult the ECB, and thereby 
deprives the prolongation of such a regime from the necessary review with respect to monetary 
policy and financial stability aspects. Furthermore,  this approach avoids the necessary regular 
review of the continued adequacy of the meas ures adopted by national authorities and does not 
lead to the necessary coordination of crisis management measures at European level. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 22 December 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
17 See Article 4(2). 
18 See the explanatory memorandum to the draft law. 
19 Communication from the Commission on the application, from 1 Ja nuary 2011, of State aid rules to support measures in 
favour of banks in the context of the financial cr isis (OJ C 329, 7.12.2010, p. 7), p. 2, point 2.