The European Commission (EC) approved on Saturday France’s plans to mobilize 300,000 million euros in liquidity for its companies through public guarantees to mitigate the impact of Covid-19, a measure that has been given the green light thanks to Brussels it has relaxed its state aid rules.
“The Commission concluded that the measures are necessary, appropriate and proportional to remedy a serious disturbance in the economy of a member state,” the community executive said in a statement, stressing that they are in line with the temporary measures adopted to facilitate the granting of State support.
Specifically, France has received the green light to provide public guarantees on loans for companies with up to 5,000 employees through its national promotion bank, Bpifrance.
It will also be able to provide state guarantees to banks on new loan portfolios for any type of company, which is considered a direct aid to companies that will allow banks to quickly provide them with the liquidity they need.
The Commission has considered that these measures comply with the regulations adopted in the face of the coronavirus pandemic because they affect loans with limits of maturity and size, limit the risk assumed by the French State to a maximum of 90% and include safeguards to ensure that banks they channel aid to companies.
“This will ensure that support is readily available, under favorable conditions and limited to those who need it in the current situation,” the Commission explains in the statement.
“We have approved these schemes under the new Temporary Framework for State Aid less than 48 hours after their approval. We are working against the clock with the Member States to allow them to take quick, effective and specific actions to support the European economy at this difficult time”, Competition Commissioner Margrethe Vestager said.
The European Union adopted this Temporary Framework on March 19, which would allow, exceptionally, to channel aid in the form of fiscal advantages, guarantees and public loans to companies, and support to banks to face the economic impact of the coronavirus.
This system, which was already used in 2009 during the financial crisis, allows Brussels to authorize public aid that under normal circumstances would not be accepted as long as it is “intended to remedy a serious disturbance in the economy of a Member State”.