Opinion of the European Central Bank of 23 September 2009 on an extension of the State guarantee covering liabilities of credit institutions (CON/2009/73)
Date: 2009-09-23
Institutions: European Central Bank
Subjects: Belgium, State aid, credit institution, financial stability, financial supervision, guarantee, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 23 September 2009 

on an extension of the State guarantee covering liabilities of credit institutions 

(CON/2009/73) 

Introduction and legal basis 

On  14  September  2009  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 for Finance, 

for  an  opinion  on  a  draft  royal  decree  amending  the  Royal  Decree  of  16 October  2008  implementing 

Article 117bis  of  the  Law  of  2 August  2002  on  the  supervision  of  the  financial  sector  and  on  financial 

services (hereinafter the ‘draft royal decree’).  

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European  Community  and  on  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, as the draft royal decree relates to rules applicable to financial institutions insofar 

as they materially influence the stability of financial institutions 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 royal decree 

1.1  The  draft  royal  decree  is  motivated  by  the  need  to  preserve  confidence  in  the  Belgian  financial 

system and by the continuation of financial market turbulence. In this context, it aims to extend the 

scope  of  the  State  guarantee  scheme  laid  down  in  the  Royal  Decree  of  16 October  2008 

implementing Article 117bis of the Law of 2 August 2002 on the supervision of the financial sector 
and on financial services, on which the ECB has already been consulted2.  

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2  

OJ L 189, 3.7.1998, p. 42.  
Currently, the Royal Decree of 16 October 2008 empowers the Belgian Minister for Finance to grant a State guarantee to 
cover liabilities of credit institutions and/or financial holding companies (financiële holding/compagnies financières) as 
well  as  their  issuance  vehicles  vis-à-vis  other  credit  institutions  and/or  professional  counterparts  belonging  to  the 
categories identified by the Minister for Finance provided that such liabilities mature at the latest on 31 October 2011 and 
that  they  have  been  entered  into  or  renewed  between  9 October  2008  and  31 October  2009  (Article  2  of  the  Royal 
Decree). See ECB Opinion CON/2008/50; all ECB opinions are published on the ECB website at www.ecb.europa.eu.  
The legal basis for the Royal Decree of 16 October 2008 is Article 117bis of the Law of 2 August 2002 (see, concerning 
this  provision:  ECB  Opinion  CON/2008/46,  in  particular  paragraphs 1.1,  2.1  and  5;  ECB  Opinion  CON/2008/50,  in 
particular paragraph 2.1; and ECB Opinion CON/2009/29). 

 
 
 
 
                                                 
 
First,  the  draft  royal  decree  would  extend  the  ultimate  maturity  date  of  the  liabilities  that  can  be 

covered  by  the  State  guarantee  under  the  Royal  Decree  of  16 October  2008  (i.e.  the  ultimate 
maturity  date  would  be  31  October  2014,  instead  of  31 October  2011  as  currently)3.  Second,  it 

would also extend the period during which such liabilities must have been entered into or renewed 

(i.e.  the  “issuing  window”  would  be  the  period  between  9 October  2008  and  31 October  2010, 
instead of the period between 9 October 2008 and 31 October 2009 as currently)4. The draft royal 

decree  would  not  amend  the  other  conditions  for  granting  the  State  guarantee  under  the  Royal 
Decree of 16 October 20085. 

1.2  The  Belgian  authorities  consider  that  the  above  extension  of  the  State  guarantee  scheme  is 

necessary  given  the  continuation  of  financial  market  turbulence,  and  in  particular  financial 

institutions’ continued refinancing difficulties. They also point out that the extension of the ultimate 

maturity  date  would  allow  the  beneficiary  institutions  to  avoid  an  excessive  concentration  of 
maturities for guaranteed obligations with a determined maturity date6.   

2.   General observations 

2.1  The ECB understands that, although it was asked to issue its opinion within one month of receipt of 

the consultation letter on 14 September 2009, the Belgian Council of Ministers approved the draft 
royal  decree  already  on  18 September  20097  without  any  prior  notification  to  the  ECB  of  any 

acceleration in the adoption process. The ECB would like to point out that, in cases of particular 

urgency which do not allow for a normal consultation period, the consulting authority may indicate 

such urgency in the consultation request and ask for a shorter deadline for adoption of the ECB’s 

opinion.  This  does  not  affect  the  national  authorities’  duty  under  Article  105(4)  of  the  Treaty  to 

consult the ECB on national draft legislative provisions falling within its fields of competence. It 

follows  from  Article  3(4)  of  Decision  98/415/EC  that  Member  States  are  obliged  to  suspend  the 

process of adoption of such draft legislative provisions pending receipt of the ECB’s opinion. The 

adopting  national  authority  should  have  the  opportunity  to  meaningfully  deliberate  the  ECB’s 
opinion prior to taking its decision on the substance8. 

2.2  The  ECB  has  issued  a  number  of  opinions  at  the  request  of  the  competent  Member  States’ 

authorities on national measures adopted in response to the global financial crisis, and has notably 

already delivered opinions on several elements of the rescue package put in place by the Belgian 

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Article 1 of the draft royal decree, amending Article 2, first subparagraph of the Royal Decree of 16 October 2008. 
Article 2 of the draft royal decree, amending Article 2, second subparagraph of the Royal Decree of 16 October 2008. 
For  a  summary  of  the  other  conditions  laid  down  in  the  Royal  Decree  of  16 October  2008,  see  ECB  Opinion 
CON/2008/50, especially paragraph 1.2. 
Report to the King preceding the draft royal decree, paragraph 3. 
See the press release of 18 September 2009 issued by the Communications Office of the Belgian Council of Ministers. 
See the Guide to consultation of the European Central Bank by national authorities regarding draft legislative provisions, 
Title IV, Section 1. 

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authorities in response to the current financial market turbulence9. The ECB invites the consulting 

authority  to  take  into  account  the  relevant  observations  made  in  its  previous  opinions  on  similar 

draft  legislative  provisions  in  other  Member  States,  some  of  which  are  repeated  below.  In 

particular,  all  of  the  comments  and  recommendations  made  by  the  ECB  in  its  Opinion 

CON/2008/50 apply equally to the draft royal decree. 

2.3  The  ECB  also  draws  attention  to  the  guidance  provided  by  the  Ecofin  Council  to  the  Member 
States in the Conclusions of its meeting of 7 October 200810, and to the Declaration issued by the 
Heads of State of the euro area on 12 October 2008 (hereinafter the ‘Declaration’)11. The principles 

contained  in  the  Declaration  and  the  Conclusions  of  the  Ecofin  Council  were  endorsed  by  the 
European Council of 15 to 16 October 200812. In particular, the ECB stresses that any initiative put 

in place by the competent national authorities to restore confidence in the national segments of the 

euro  area  financial  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  institutions13  since,  as  acknowledged  in  the  Declaration,  significant  differences  in 

national  implementation  could  have  a  counter-productive  effect,  creating  distortions  in  global 

banking markets.  

3.  

Specific observations 

3.1 

Interaction of the draft royal decree with the monetary policy of the euro area 

Since the draft royal decree aims at extending the scope of the State guarantee scheme laid down in 

the  Royal  Decree  of  16  October  2008,  on  which  the  ECB  has  already  been  consulted,  the  ECB 

would  like  to  recall  some  elements  previously  mentioned  in  its  Opinion  CON/2008/50  which  are 

important from the perspective of monetary policy. 

In particular, in the context of the adoption of the Royal Decree of 16 October 2008, the Belgian 

authorities  publicly  announced  that  the  concept  of  ‘liabilities’  (verbintenissen/engagements) 

eligible to be covered by the State guarantee scheme provided for in that Royal Decree was to be 

9  

10  

11  

12 
13 

The  related  ECB  opinions  on  Belgian  draft  legislative  provisions  are:  (i)   CON/2008/46;  (ii)  CON/2008/50; 
(iii) CON/2008/61; (iv) CON/2008/74; (v) CON/2008/91; (vi) CON/2009/25; and (vii) CON/2009/29. 
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 principle be temporary; (ii) the interests of taxpayers should be protected; (iii) existing 
shareholders should bear the due consequences of the intervention; (iv) the Government should be in a position to bring 
about a change of management; (v) management should not retain undue benefits; (vi) governments may have, inter alia, 
the power to intervene in remuneration; (vii) legitimate interests of competitors must be protected, in particular through 
State aid rules; and (viii) negative spill-over effects should be avoided.  
The text of the Declaration is available on the former French Presidency’s website at www.ue2008.fr. The Member States 
agreed  to:  (i)  ensure  appropriate  liquidity  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  sufficient  flexibility  in  the 
implementation of accounting rules; and (vi) enhance cooperation procedures among European countries. 
See Brussels European Council of 15 to 16 October 2008, paragraph 3 of the Presidency Conclusions. 
See notably ECB Opinions CON/2009/12, paragraph 2.2 and CON/2009/62, paragraph 2.4. 

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understood broadly and would encompass all of the financing raised by a beneficiary institution in 

order  to  obtain  refinancing  from  credit  institutions  and  institutional  counterparties,  including 
notably interbank deposits14. The ECB understands that although the draft royal decree amends the 

Royal Decree of 16 October 2008, it does not further specify what is encompassed by ‘liabilities’ 

(verbintenissen/engagements)  within  the  meaning  of  that  Royal  Decree  and,  hence,  it  does  not 

exclude interbank deposits.  

In this respect, the ECB wishes to make the following observations. First, it would like to remind 

the consulting authority that the arrangements for the granting of government guarantees on bank 

debt  should,  when  practically  implemented,  aim  at:  (i)  addressing  the  funding  problems  of 

liquidity-constrained  solvent  banks  by  improving  the  functioning  of  the  market  for  bank  debt  of 

longer-term  maturity;  (ii)  preserving  the  level  playing  field  among  financial  institutions  and 

avoiding  market  distortions;  and  (iii)  ensuring  consistency  with  the  management  of  Eurosystem 
liquidity. In line with the Declaration and as stated in its recommendations15, the ECB restates its 

view that euro area governments should make available a government guarantee of new medium-

term (up to five years) bank senior debt issuance which must be limited in time. In the same vein, 

government  guarantees  on  short-term  bank  debt  with  maturity  of  three  to  12  months  may  be 
provided  in  order  to  revitalise  the  short-term  bank  debt  market16.  Second,  as  stated  in  the 

Declaration, it is also stressed that it is of the utmost importance that support operations conducted 

by national authorities do not in any way affect the conduct and the implementation of monetary 
policy in the euro area  17. In this context, the ECB reiterates its view that the extension of the State 
guarantee  to  cover  interbank  deposits  should  be  avoided18,  as  this  could  entail  a  substantial 

distortion in the various national segments of the euro area money market by potentially increasing 

short-term debt issuance activity across Member States and therefore impairing the implementation 

of  the  single  monetary  policy,  which  is  an  exclusive  competence  of  the  Eurosystem  under 
Article 105(2) of the Treaty19. It could also affect the transmission of monetary policy decisions20 

and make it difficult to maintain the necessary level playing field between the financial institutions 

benefiting from the State guarantee and those not benefiting from it within the euro area. 

14  

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19  

20  

See ECB Opinion CON/2008/50, paragraph 3.2 and the reference to the press release of 10 October 2008 issued by the 
Secretariat of the Belgian Deputy Prime Minister and Minister of Finance. 
Recommendations  of  the  Governing  Council  of  the  European  Central  Bank  on  government  guarantees  for  bank  debt, 
20 October 2008, available on the ECB’s website. 
See notably ECB Opinions CON/2009/12, paragraph 3.3.3 and CON/2009/49, paragraph 3.9. 
See ECB Opinion CON/2009/12, paragraph 2.3.  
See  ECB  Opinion  CON/2008/50,  paragraph  3.2,  and  more  recently  ECB  Opinions  CON/2009/12,  paragraph  3.3.2  and 
CON/2009/49, paragraph 3.9.  
See  also  ECB  Opinion  CON/2008/48,  in  particular  paragraph  3.7,  and  more  recently  ECB  Opinions  CON/2009/12, 
paragraph 3.3.2 and CON/2009/49, paragraph 3.9. 
See notably ECB Opinions CON/2009/12, paragraph 3.3.2 and CON/2009/49, paragraph 3.9. 

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3.2  Temporary nature of the scheme 

In  line  with  the  Conclusions  of  the  Ecofin  Council  and  the  Declaration,  it  is  recalled  that 

harmonisation  of  the  measures  implemented  at  the  national  level  is  essential  to  ensure  the 

integration  of  the  financial  markets  within  the  EU,  and  within  the  euro  area  in  particular.  In  this 

regard, the ECB emphasises that coordination regarding the duration of national financial support 
schemes  across  the  EU  is  of  crucial  importance  in  order  to  ensure  a  level  playing  field21.  In 
addition, the ECB recalls the need for national support measures to be temporary in nature22. While 

the  current  elements  of  fragility  in  the  national  financial  sector  lie  at  the  basis  of  the  proposed 

extension  of  the  ultimate  maturity  date  of  the  new  liabilities  that  can  be  covered  by  the  State 

guarantee  under  the  Royal  Decree  of  16  October  2008  and  of  the  period  during  which  such 

liabilities must have been entered into or renewed to be covered by such a State guarantee, it is also 

understood  that  the  temporary  nature  of  this  State  guarantee  scheme  is  maintained  in  essence, 

hence ensuring that the involvement of the Belgian State will be limited in time. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 23 September 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

21 
22 

See notably ECB Opinions CON/2009/24, paragraph 3.1 and CON/2009/54, paragraph 2.5.2. 
See notably ECB Opinions CON/2009/24, paragraph 2.2 and CON/2009/62, paragraph 3.3. 

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