The European Commission said on Tuesday it has approved a guarantee package that Germany intends to grant to NordLB to cover the bank's medium-term refinancing needs in the financial crisis.
"The guarantee is necessary to avoid a serious disturbance in the German economy. The measure is limited in time and scope, ensures a market-oriented remuneration and foresees sufficient behavioral safeguards to avoid abuses," the European Union (EU)'s competition guardian said in a statement.
The specificity of the program lies in the fact that the debt for which the guarantee is received is highly collateralized, which goes beyond what has been seen in other cases.
The guarantee program is structured around a special purpose vehicle that supplies financing to NordLB via securities with a maximum maturity of three to five years, backed by a very good, diversified guarantee pool of assets that is constantly reviewed.
Source: Xinhua
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