Brussels, 3 October 2022
The Commission has approved, under EU State aid rules, a Croatian methodology to calculate the premiums on State guaranteed loans for mid-caps and large enterprises. The calculation methodology will serve the Croatian granting authorities to calculate, with respect to guarantees granted under the Croatian Recovery and Resilience Plan: (i) guarantee premiums in line with market prices; or (ii) the aid amount in guarantees for the purpose of the application of the De Minimis Regulation or the General Block Exemption Regulation, which would exempt measures from the requirement of prior notification of the aid to the Commission if the amount is sufficiently small.
Under the calculation methodology approved today, guarantee premiums are linked to a combination of alternative pricing methodologies, which are based on either the borrowers’ expected losses, appropriate credit default swap indexes, or the interest rates charged by the financial intermediary. The applicable guarantee premium cannot be lower than the prices indicated by each one of the alternative methodologies. This approach ensures that these premiums are adequate to remunerate the risks borne by the guarantor and are based on objective market benchmarks. The methodology will apply until 3 October 2026. The Commission assessed the calculation methodology under EU State Aid rules, in particular the Commission’s Notice on State aid in the form of guarantees (‘Guarantee Notice’), which determines if financial guarantees constitute State aid or not.
The Commission concluded that the calculation methodology is in line with the Guarantee Notice. In particular, the Commission found that it: (i) ensures that premiums on guaranteed loans are market conform; (ii) establishes the borrower’s credit worthiness by reference to external credit ratings; (iii) leads to guarantee fees that, regardless of the duration of exposure, will remain close to median credit spreads of European corporate bonds; and (iv) ensures that the lending banks will not benefit from the State guarantee. On this basis, the Commission approved the methodology under EU State aid rules. The non-confidential version of the decision will be made available under the case number SA. 64359 in the State aid register on the Commission’s competition website once confidentiality issues have been resolved.
Source – EU Commission