State aid: Commission approves German measures to support economy in Coronavirus outbreak

The European Commission has approved two German State aid schemes to support the German economy in the context of the Coronavirus outbreak. The schemes were approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19 March 2020.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: "A few days ago, the German government announced its plans to provide liquidity to the German economy to manage the effects of the economic impact of the Coronavirus outbreak. Today, we approved a number of German measures, shortly after adopting our new State aid Temporary Framework. We are working with Member States to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The German support measures

Germany notified to the Commission two separate support measures under the Temporary Framework, implemented through the German promotional bank Kreditanstalt für Wiederaufbau (“KfW”):

(i)   A loan programme covering up to 90% of the risk for loans for companies of all sizes. Eligible loans may have a maturity of up to 5 years and can reach €1 billion per company, depending on the company's liquidity needs.

(ii)  A loan programme in which the KfW participates together with private banks to provide larger loans as a consortium. For this scheme, the risk taken by the State may cover up to 80% of a specific loan but not more than 50% of total debt of a company.

The measures will allow the KfW to provide liquidity in the form of subsidised loans to companies affected by the Coronavirus outbreak. This happens in close cooperation with commercial banks.

The Commission found that the German measures are in line with the conditions set out in the Temporary Framework. In particular, the loan amount per company is linked to cover its liquidity needs for the foreseeable future, loans will only be provided until the end of this year and are limited to a maximum six-year duration. Furthermore, in its agreements with the commercial banks, the KfW will ensure that the advantage offered by the subsidised loans is passed on to the companies that need the liquidity.

The Commission concluded that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measure under EU State aid rules.

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