State aid: EU Commission gives green light to the Pan-European Guarantee Fund to enable up to €200 billion …

…financing for companies affected by the coronavirus outbreak in 21 Member States

The European Commission found the creation of a €25 billion Pan-European Guarantee Fund managed by the European Investment Bank (EIB) to support companies affected by the coronavirus outbreak to be in line with EU State aid rules. The Fund is expected to mobilise up to €200 billion of additional financing to support mainly small and medium-size enterprises (SMEs) affected by the outbreak in the 21 participating Member States.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The Pan-European Guarantee Fund is expected to unlock €200 billion of support for European businesses – in particular SMEs – which have been severely hit by this crisis. The Fund brings together support by 21 Member States and will be administered by the European Investment Bank and the European Investment Fund.

It complements the national support schemes. We continue to work closely with Member States and with the other European institutions to find workable solutions to mitigate the economic impact of the coronavirus outbreak, whilst preserving the level playing field in the Single Market”.”

Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “Throughout this crisis, our goal has been to support EU businesses as much as possible, especially SMEs. Today’s Commission decision enables the full operationalisation of the EIB Fund, and financing can now flow in support of the EU businesses that really need it. This is the third of the safety nets agreed by the Council.

Member States should use all three crisis tools to the maximum to support their workers and businesses, particular now during the second wave of the pandemic.”

The Pan-European Guarantee Fund

In April 2020, the European Council endorsed the establishment of a Pan-European Guarantee Fund under the management of the European Investment Bank Group, as part of the overall EU response to the coronavirus outbreak. It is one of the three safety nets agreed by the European Council to mitigate the economic impact on workers, businesses and countries.

The Fund will provide guarantees on debt instruments (such as loans). It aims at addressing in a coordinated manner the financing needs of European companies (mainly SMEs) that are expected to be viable in the long-term, but are facing difficulties in the current crisis across Europe. The EIB and the European Investment Fund (‘EIF’) expect up to €200 billion of additional financing to be mobilised thanks to the Fund.

All Member States have the option to participate in the Fund. So far, 21 Member States decided to participate. The participating Member States are Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Slovakia, Spain and Sweden.

The Fund’s operations will be jointly guaranteed by the participating Member States from their national budgets. The contribution to the Fund by each participating Member State is proportionate to their contribution to the EIB capital. These contributions, which amount to €25 billion in total, take the form of guarantees that will cover part of losses incurred by the beneficiaries in the operations supported by the Fund.

By pooling credit risk across all of the participating Member States, the overall impact of the Fund can be maximised, whilst the average cost of the Fund will be significantly reduced compared to national schemes.

The Fund will be administered by the EIB and the EIF. The participating Member States will take part in the governance of the Fund through the so-called Contributors Committee, which will decide on the use of guarantee. It is set up to be temporary in nature and will be able to guarantee loans provided until 31 December 2021.

The Commission’s State aid assessment

The 21 participating Member States notified their respective contributions to the Fund to the Commission under EU State aid rules.

The Commission assessed the establishment of the Fund and the guarantees on loans to be provided by the Fund under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy.

The Commission found that the establishment of the Fund and the guarantees on loans to be provided by the Fund are compatible with the principles set out in the EU Treaty and are well targeted to remedy a serious disturbance to the economy of the participating Members States. In particular, (i) the Fund is temporary in nature; (ii) the guarantees cover up to 70-90% of the underlying loans; (iii) their maturity is limited to up to 6 years; and (iv) the financial intermediaries are obliged to pass on the advantage to the final beneficiaries to the largest extent possible.

The Commission concluded that the support measures that will be provided by the Fund will contribute to managing the economic impact of the coronavirus in the 21 participating Members States. They are necessary, appropriate and proportionate to remedy a serious disturbance in the economy, in line with Article 107(3)(b) TFEU and the general principles set out in the State aid Temporary Framework.

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


In case of particularly severe economic situations, such as the one currently faced by all Member States and the UK due the coronavirus outbreak, EU State aid rules allow Member States to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU.

On 19 March 2020, the Commission has adopted a State aid Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak.

The Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The Temporary Framework will be in place until the end of June 2021. As solvency issues may materialise only at a later stage as this crisis evolves, for recapitalisation measures only the Commission has extended this period until the end of September 2021. With a view to ensuring legal certainty, the Commission will assess before those dates if it needs to be extended.

The non-confidential version of the decision will be made available under the case numbers SA.58218, SA.58219, SA.58221, SA.58222, SA.58224, SA.58225, SA.58226, SA.58227, SA.58228, SA.58229, SA.58230, SA.58232, SA.58233, SA.58235, SA.58236, SA.58237, SA.58238, SA.58239, SA.58242, SA.58243 and SA.58244 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.