The European Commission has found Greek plans aimed at supporting the reduction of non-performing loans of Greek banks to be free of any State aid.
The Commission found that, under the asset protection scheme (known by the name of “Hercules”), the Greek State will be remunerated in line with market conditions for the risk it will assume by granting a guarantee on securitised non-performing loans.
If a Member State intervenes as a private investor would do, and is remunerated for the risk assumed in a way a private investor would accept, such interventions do not constitute State aid. The Commission therefore concluded that the Greek measure does not involve State aid within the meaning of the EU rules.
Commissioner Margrethe Vestager, in charge of competition policy, said: “I welcome that with the Greek government we have a found a market conform solution to tackle the stock of non-performing loans weighing on the balance sheets of Greek banks. The scheme we approved today is another good example of how Member States can help banks clean up their balance sheets without granting aid or distorting competition.”
“Hercules” is designed to assist banks in securitising and moving non-performing loans off their balance sheets. Under the scheme, an individually managed, private securitisation vehicle will buy non-performing loans from the bank and sell notes to investors. The State will provide a public guarantee for the senior, less risky notes of the securitisation vehicle. In exchange, the State will receive a remuneration at market terms. The objective is to attract a wide range of investors and to support the banks in their ongoing efforts to reduce the amount of non-performing loans on their balance sheets.
The Commission’s assessment showed that the State guarantees will be remunerated at market terms according to the risk taken, i.e. in a manner that would be acceptable for a private operator under market conditions. This is in particular ensured by the following elements:
- First, the risk for the State will be limited since the State guarantee only applies to the senior tranche of the notes sold by the securitisation vehicle. An independent rating agency approved by the European Central Bank will determine the rating of the senior tranche.
- Second, the State guarantee on the senior tranche will only become effective, if more than half of the non-guaranteed and risk-bearing riskier tranches have been successfully sold to private market participants. This will ensure that the risk distribution of the tranches is tested and confirmed by the market before the State assumes any risk.
- Third, the State’s remuneration for the risk taken will be market conform. The guarantee fee will be based on a market benchmark and correspond to the level and duration of the risk the State takes in granting the guarantee. This means that the guarantee fee paid will increase over time in line with the duration of the State’s exposure. This fee structure, in addition to the appointment of an external servicer, aims to increase the efficiency of the workout and likely recovery on the non-performing loans.
European Labour Authority starts its work
Today, the European Labour Authority starts its activities with an inaugural ceremony and the first meeting of its Management Board. The launch takes place two years after European Commission President Jean-Claude Juncker announced the idea for such an Authority in his 2017 State of the Union address before the European Parliament.
Marking the event, President Juncker said: “The European Labour Authority is the cornerstone in our work to make EU labour rules fair, effective and enforceable. It is no surprise that the Authority was established in record time, given its great necessity. The Authority will provide workers and employers with better access to information on their rights and obligations and will support national labour authorities in their cross-border activities. This will directly support the millions of Europeans who live or work in another Member State as well as the millions of businesses operating cross-border in the EU. This is another major step towards an integrated European labour market built on trust, reliable rules and effective cooperation. I want to thank all those – in the Parliament, the Council and the Commission – who have made the Authority a reality. I wish it every success.”
President Juncker will participate in the opening ceremony in Brussels together with the Prime Minister of Slovakia, Peter Pellegrini, given Member States’ choice of Bratislava as the Authority’s location. Commission Vice-Presidents Valdis Dombrovskis and Maroš Šefčovič, Commissioner Marianne Thyssen and other guests will also attend.
Vice-President Dombrovskis said: “The European Labour Authority brings national authorities together. Both in its governance structure and day-to-day operations, the Authority will facilitate the cooperation between Member State representatives, as well as social partners.” Commissioner Thyssen added: “The Labour Authority will be the oil in the machinery of the internal market. A place where colleagues from different national authorities become used to working together and solving problems together. This will make the wheels of labour mobility turn more smoothly, to the advantage of millions of European citizens and businesses that make use of their right of free movement every day.”
The Management Board of the Authority consists of representatives of Member States, of the Commission, EU-level social partners, European Parliament, as well as observers from Iceland, Liechtenstein, Norway, Switzerland and other EU Agencies in the field of employment and social affairs. On 17 October, they will meet for the first time to adopt the necessary decisions to put the Authority into action and share their views on the initial work programme.
European Agenda on Migration four years on: Marked progress needs consolidating in face of volatile situation
Ahead of the October European Council, the Commission is today reporting on key progress under the European Agenda on Migration since 2015, with focus on steps taken by the EU since the last progress report in March 2019. The Commission also set out those areas where work must continue to address current and future migration challenges.
High Representative and Vice President Federica Mogherini said: “Over the past years we have built an EU external migration policy when there was none. We have developed new partnerships and strengthened the old ones, starting with the African Union and the United Nations. Together we are saving lives and protecting those in need by enabling legal migration channels, addressing the drivers of migration, and fighting against smuggling of migrants and trafficking in human beings. The past years have confirmed that no country can address this complexity alone. It is only by working together, by joining forces that we can tackle these global challenges in an effective, human and sustainable way.”
Commissioner for Migration, Home Affairs and Citizenship Dimitris Avramopoulos said: “These past years have shown that only together as a Union we are capable of responding to extreme circumstances. Collectively, we have laid down the structural and operational foundations for a comprehensive European migration system that not only responds effectively and delivers results, but also promotes solidarity and responsibility. While there is still more work to do and the situation remains fragile, we are much better prepared than we were in 2015.”
When the migration crisis broke out in 2015, the EU took swift and determined action to face exceptional challenges through common European solutions. Over the past 4 years, the basis for a strong collective EU migration policy and new tools and procedures for efficient coordination and cooperation are now in place. The EU is better equipped than ever before to provide operational and financial support to Member States under pressure, manage the external borders and work in partnership with countries outside the EU. However, more efforts are needed to complete this work and make the EU’s migration policy truly future-proof, effective and resilient.
Important progress made towards a strong and effective EU migration management policy
Over the past 5 years, the Commission has worked tirelessly to build a stronger EU policy on migration. By focusing on priority areas we have managed to move from crisis mode to creating structural solutions to ensure Europe is better prepared for any future migratory challenges – in the medium and long term.
Solidarity and support to Member States: The EU is now working more closely with Member States than ever before through the hotspot approach and EU Agencies with over 2,300 staff deployed on the ground – to better manage migration, strengthen the external borders, save lives, reduce the number of irregular arrivals and ensure effective returns. The coordination processes and operational structures developed and established on the ground are key achievements that will remain in place.
Stronger cooperation with partner countries is achieving results: The EU has stepped up the work with partners outside of Europe to tackle the root causes of irregular migration, protect refugees and migrants and support host communities. Unprecedented funding, worth €9.7 billion, has been mobilised to this effect, notably through the EU Trust Fund for Africa, the Syria Trust Fund or the Facility for Refugees in Turkey, under which 97% of €6 billion has already been allocated. EU support is also focusing on resilience, stability, economic and employment opportunities. Cooperation with partner countries on return has also improved, with return and readmission agreements and arrangements now in place with 23 partner countries.
Groundwork laid for future strong and fair asylum rules:The need for a reformed Common European Asylum System was one of the clearest lessons of the 2015 crisis. The Commission put all the necessary proposals on the table for a complete and sustainable EU framework for migration and asylum. Whilst progress was made on five out of seven proposals, the reform is still pending and a common approach to securing a fair, more efficient and sustainable asylum system is still needed.
Important progress on safe and legal pathways: Over the past 5 years, Member States have made the largest collective efforts ever on resettlement, with almost 63,000 persons resettled. Confirming their commitment and determination to ensure the continuity of EU resettlement efforts in the future, Member States have responded to the Commission’s call to continue resettling in 2020 by already pledging around 30,000 resettlement places.
More work and immediate steps required in key areas
Whilst the overall migratory situation across all routes has returned to pre-crisis levels with arrivals in September 2019 being around 90% lower than in September 2015, the situation remains volatile and geopolitical developments have created new challenges for the EU. Further work is needed to address immediate key challenges and to progress on on-going work, in particular:
- Urgent action to improve the conditions in the Eastern Mediterranean: Whilst the Greek authorities have undertaken steps over the past months to alleviate the pressure on the islands, including notably a new reception strategy and new asylum measures, the increase in arrivals has put strain on an already fraught system. While the EU-Turkey Statement continues to deliver concrete results, renewed migratory pressure in Turkey and instability in the wider region continues to cause concern. In view of this, urgent action must be taken to improve reception conditions, increase transfers to mainland Greece from the islands and increase returns under the Statement. The Commission is also stepping up its support to Cyprus, which is currently facing an increase in arrivals.
- More solidarity on search and rescue: Despite search and rescue efforts, lives continue to be lost at sea and the ad hoc relocation solutions coordinated by the Commission are clearly not long-term remedies. The Commission remains committed to working with and supporting Member States in agreeing temporary arrangements to facilitate disembarkation following search and rescue in the Mediterranean, and encourages more Member States to participate in solidarity efforts. Such arrangements could serve as inspiration for addressing flows in other parts of the Mediterranean.
- Accelerate evacuations from Libya: The situation in Libya remains a major concern. After violent conflict erupted in and around Tripoli in April 2019, intensified efforts through the trilateral AU-EU-UN taskforce must continue to help free migrants from detention, facilitate voluntary return (49,000 returns so far) and evacuate the most vulnerable persons (over 4,000 evacuated). Member States urgently need to increase and accelerate the pace of resettlements under the Emergency Transit Mechanism (ETM) in Niger run with the UNHCR and support the newly established ETM in Rwanda.
Antitrust: Commission imposes interim measures on Broadcom in TV and modem chipset markets
The European Commission has ordered Broadcom to stop applying certain provisions contained in agreements with six of its main customers. This will prevent serious and irreparable harm to competition likely to be caused by Broadcom’s conduct, which prima facie (at first sight) infringes EU competition rules.
Margrethe Vestager, Commissioner in charge of competition policy, said: “We have strong indications that Broadcom, the world’s leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anticompetitive practices. Broadcom’s behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition. We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We therefore ordered Broadcom to immediately stop its conduct.”
Broadcom is the world leader in the supply of chipsets for TV set-top boxes and modems, including so-called systems-on-a-chip. Systems-on-a-chip combine electronic circuits of various components in a single unit, which constitute the “brain” of a set-top box or modem. They are essential to bring the television signals and connectivity to consumers’ premises.
In June 2019, the Commission opened an antitrust investigation to assess whether Broadcom restricted competition in various markets for these chipsets and components for so-called central office/head end equipment by means of certain practices, including exclusivity, tying, bundling, interoperability degradation and abusive use of intellectual property rights.
At the same time, the Commission issued a Statement of Objections where it preliminarily concluded that interim measures with respect to certain aspects of Broadcom’s conduct may be required to ensure the effectiveness of any final decision taken by the Commission in the future.
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