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Guarantee scheme

In October 2008, the State of the Netherlands introduced its Credit Guarantee Scheme of 200 billion euro for the issuance of medium term debt instruments by banks. The scheme had been introduced to improve the financing of financial institutions, so as to safeguard corporate and household loans. The Credit Guarantee Scheme has to be regarded in line with earlier measures to protect the financial sector.

Prolongation of the scheme

Given the continuing volatility in the capital markets, the Dutch authorities decided to keep the guarantee window open longer than previously foreseen. The Credit Guarantee Scheme has been extended twice, most recently on 1 July 2010, up to 31 December 2010. The Credit Guarantee Scheme has been suspended from 1 January 2011 onwards. Financial institutions can no longer apply for guarantees. To discourage the use of government guarantees, guarantee fees have been raised in January 2010 and July 2010.

Guarantee fee

The size of the guarantee fee depended on the credit rating of the bank concerned and on the maturity of the guaranteed loan. The fee for loans with maturities exceeding one year consisted of a fixed fee and a variable fee. The maximum annual guarantee fee that were valid from 1 July 2010 onwards can be found in the table below.

 

Fixed Fee   

Variable fee
(CDS-spread)   

Total fee   

AAA

75

53

128

AA

80

68

148

A or A +

85

73

158

A-

90

73

163

Other

110

93

203

Targeted loans

The guarantee scheme targets non-complex senior unsecured loans. These are (unsubordinated) loans which are not secured by collateral, such as commercial paper, certificates of deposit of medium term notes, with maturities ranging from 3 to 36 months (‘plain vanilla’). All banks with a Dutch bank permit may apply for a guarantee at the Dutch State Treasury Agency. Prior to the guarantee, the Dutch Central Bank will be consulted with regard to the liquidity rate and the solvency rate of the applying bank. Banks that make use of the Credit Guarantee Scheme are, regarding publicly offered guaranteed securities or requests of admission of these securities to the trade on a functional regulated market based in the Netherlands, not obliged to produce a publicly obtainable prospectus that has been approved by the Netherlands Authority for the Financial Markets. More than one issuance can be made per guarantee up to the maximum guaranteed amount.

Prolongation facility buybacks of guaranteed debt

As part of the exit strategy, as of the first of January 2011, banks that had used the guarantee scheme to issue debt were allowed to buy back guaranteed debt from the capital market. The facility to buy back guaranteed debt closed at 30 June 2011. It was decided to prolong the facility permanently; the letter to parliament on the prolongation can be found at the bottom of this page (in Dutch). The conditions of the facility will remain unchanged. For example, the bank in question has to pay a ‘closing out fee’ equaling 15% of the yearly guarantee fee over the remaining maturity of the debt concerned. A full overview of the conditions can be found in the Rules in Schedule 11 (see Available documentation below, where also two relevant forms can be found).

Available documentation

Rules of the "2008 Credit Guarantee Scheme of the State of the Netherlands", as orginally promulgated on 21 October 2008 and most recently amended and restated on 30 June 2011.

Annex 1: Form of Cancellation Application
Annex 3: Form of Cancellation Notice

For previous versions of the Rules, click here.

Overview of guarantees guaranted

Here you can find an overview of the assigned guarantees that have been granted by the State of the Netherlands.

Contact

For questions on the rules governing the guarantee scheme:

mr. M. Mennes
Phone: +31 70 342 4084
Email: dsta.garanties@minfin.nl 

For all other questions:

ms. C.P. de Sanders
Phone: +31 70 342 8950
or
ms. R.A.V. Khusial
Phone: +31 70 342 8945
Email: dsta.garanties@minfin.nl 

 

 

For more information:

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