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)
Date: 2010-12-22
Institutions: European Central Bank
Subjects: Poland, State aid, capital increase, financial institution, financial stability, national law

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 the provision of State Treasury support to financial 

institutions and the Law on recapitalisation of some financial 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  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft law contains 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 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  institutions2  (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 

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OJ L 189, 3.7.1998, p. 42. 
Dziennik Ustaw of 2009 No 39, Item 308. 
See Opinion CON/2008/80; all ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
Dziennik Ustaw of 2010 No 3, Item 12. 
See Opinion CON/2009/82. 

 
 
 
 
                                                 
certain  financial  institutions  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 whereby various support measures 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 subsequently 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 authorities to (i) provide a State guarantee for market-

initiated  recapitalisation  operations,  and  (ii)  initiate  compulsory  State  takeovers  of  a  distressed 
financial institution9. 

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 Polish financial institutions do not currently need 

to  use  the  support  foreseen  by  the  abovementioned  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 current 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 support12. 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  from  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. 

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Dziennik Ustaw of 2010 No 40, Item 226. 
See Opinion CON/2009/19. 
Six categories of financial institutions established in Poland were eligible for the support scheme: banks, credit unions, 
investment funds, brokerage houses, insurance companies and pension funds (see Article 2 of the Law on State support). 
See Article 1 of the draft law. See explanatory memorandum to the draft law, p. 1. 
See Article 1 of the Law amending the Law on State support. 
See the explanatory memorandum to the draft law, p. 1, second paragraph. 
See Article 2 of the draft law, repealing the Law amending the Law on State support and Articles 1 and 3 of the draft law 
amending Article 20 of the Law on State support and Article 24 of the Law on recapitalisation, respectively. 
See the explanatory memorandum to the draft law, p. 1, third paragraph. 

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2. 

The appropriate time to consult the ECB 

2.1  The consulting authority submitted the draft law to the ECB on 8 December 2010, requesting the 

ECB’s  opinion  within  seven  days  due  to  ‘the  urgent  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  provisions  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 consulting authority must 

state the reasons. 

2.3 

In view of the above, the ECB emphasises that the 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  which  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 support does not explicitly exclude interbank deposits 

from  among  the  obligations  that  may  be  secured  with  a  State  guarantee.  Although  the  draft  law 

amends the Law on State support, the ECB understands that it does not include amendments which 

explicitly  exclude  interbank  deposits.  In  this  respect,  the  ECB  once  again  reiterates  that  State 

guarantees for interbank deposits should 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 Polski’s monetary policy decisions15. 

3.3  Second, the ECB understands that the Law on State support introduces an explicit legal basis for 

the provision of State guarantees securing the repayment of Narodowy Bank Polski’s refinancing 

credit, including in cases where such credit is provided 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 

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See second paragraph of the consultation letter of 8 December 2010. 
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. 
See paragraph 4.3 of Opinion CON/2008/80. 

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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  coordination  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 support 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 State support and the Law on recapitalisation, thus 
converting the temporary provisions into permanent provisions18. 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 legal review of the measures unnecessary. Avoiding 

the  renewal  of  a  temporary  legal  regime  circumvents  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 measures 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 

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See Article 4(2). 
See the explanatory memorandum to the draft law. 
Communication from the Commission on the application, from 1 January 2011, 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), p. 2, point 2. 

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