Commission approves over €800 million in State aid to Lithuanian development bank

The European Commission has approved, under EU State aid rules, capital injections worth €813 million and €15 million per year in corporate income tax and dividend payment exemptions in favour of Lithuanian development bank Investicijos į Lietuvos ekonomiką ('ILTE'). The measures are provided by the Lithuanian Ministry of Finance.

Lithuanian measures

Lithuania notified to the Commission capital injections in the form of equity (€813 million) and exemptions from paying corporate income tax and dividends (€15 million per year) in favour of ILTE. The aim is to provide ILTE the capacity to ensure financially viable and efficient investments in various sectors with market failures.

ILTE's activities should ensure the availability of funding for projects that face difficulties in obtaining sufficient finance. Business projects in agriculture, renewable energy, district heating, building refurbishment, transport, energy, defence, digital and social infrastructure will be eligible. They often lack sufficient market financing due to high investment volumes, long payback periods, higher risks, limited risk appetite or requirements from private financiers.

The Commission's assessment

The Commission assessed the Lithuanian measures under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU ('TFEU'), which enables Member States to support the development of certain economic activities under certain conditions. 

In particular, the Commission found that:

• The measures facilitate the development of economic activities, in particular for agriculture, business, renewable energy, district heating, building refurbishment, transport, energy, defence, digital and social infrastructure;
• The aid is necessary and appropriate to achieve the objectives pursued. It is proportionate as it is limited to bridging market gaps, so that distortions of competition are minimised;
• Lithuania has committed to several measures, including the limitation of financial activities to relevant market failures and the implementation of no crowding out measures of private sector operators, to ensure that ILTE will not undercut private financial institutions active in the Lithuanian market.

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

Background

According to Article 107(1) TFEU, a measure shall constitute State aid if the following four cumulative conditions are met: (i) the measure has to be granted by Member States through State resources, (ii) the measure has to confer a selective economic advantage to certain companies, (iii) the advantage has to distort or threaten to distort competition, and (iv) the measure has to affect trade between EU Member States.

All measures entailing State aid must be notified to the Commission for prior approval, unless covered by one of the State aid block exemption rules.

For more information

The non-confidential version of the decision will be made available under the case number SA.120268 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.