The European Commission has approved an up to €500 million Croatian scheme to support companies across sectors in the context of Russia’s invasion of Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economy is experiencing a serious disturbance.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “In a period during which the functioning of the market is severely disturbed, this up to €500 million Croatian scheme will ensure that sufficient liquidity remains available to those companies affected by the current geopolitical crisis by incentivizing lending by private banks. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”
The Croatian measure
Croatia notified to the Commission under the Temporary Crisis Framework an up to €500 million scheme to support companies across sectors active in Croatia in the context of Russia’s invasion of Ukraine.
The measure will be open to companies active in all sectors affected by the current crisis, except credit and financial institutions.
Under this measure, which will be administered by the Croatian Bank for Reconstruction and Development (HBOR), the aid will consist in limited amounts of aid or liquidity support in any of the following forms: (i) direct loans;(ii) subsidised loans; or (iii) interest rate subsidies.
This scheme is one of a series of measures conceived by the Croatian authorities to remedy a serious disturbance in their economy. In particular, this measure is aimed at incentivising lending by private banks to companies severely affected by the current geopolitical situation in a period during which the normal functioning of the market is significantly disturbed.
The Commission found that the Croatian scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, when it comes to limited amounts of aid, (i) the support will not exceed €35,000 per company active in the agriculture, fisheries and aquaculture sectors and €400,000 per company active in all other sectors; and (ii) the aid will be granted by 31 December 2022 at the latest.
When it comes to liquidity support in the form of subsidised loans, the maximum amount per beneficiary will be equal to (i) 15% of its average total annual turnover over the last three closed accounting periods; or (ii) 50% of the energy costs incurred over a 12-month period preceding the application for aid.
Furthermore, (i) the maturity of the loans is limited to six years; (ii) the annual interest rates on the loans respect the minimum levels set out in the Temporary Crisis Framework; (iii) the loans relate to investment or working capital needs; and (iv) the loans contracts will be signed by 31 December 2022 at the latest.
Exceptionally, when the companies are active in sectors that are particularly affected by direct or indirect effects of the current geopolitical crisis and the related sanctions, the amount of the loan may be increased to cover their liquidity needs (i) for a 12-month period for SMEs; and (ii) for a 6 month-period for large enterprises.
In addition, the public support will come subject to conditions to limit undue distortions of competition. For the loans granted through financial intermediaries, this includes safeguards aimed at ensuring that the advantages of the measure are passed on to the largest extent possible to the final beneficiaries via the financial intermediaries.
The Commission concluded that the Croatian scheme is 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 Crisis Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.