Federación de cajas de Ahorros Vasco-Navarras

Throughout 2009, financial markets were affected by the international financial crisis which resulted in cash-flow restrictions for economic activity as a whole.

Since this international credit restriction was felt both by the Basque economy and Basque companies, the ACBC Administration therefore authorized extraordinary lines to help alleviate money supply needs.

In addition to their usual lines of support, the collaboration agreements in force in 2009 also included interim support programmes directed towards the worst affected sectors of the Basque economy.

One of the direct effects of the economic recession was the drop in tax collection by Provincial Councils - the main source of funding for the Basque Administration, which in turn increased levels of indebtedness and required additional measures to combat the drop in revenue.

The Basque Savings Banks continued to boast the highest overall participation rates in the agreements and collaboration between the Basque Government and financial institutions throughout 2009.

In 2009, resources allocated to financing the financial collaboration agreements by the three Basque Savings Banks totalled approximately 634.2 M €, with total resources channelled by all financial institutions amounting to 1,295 M € with an approximate participation rate, therefore, of 49%.

Housing

The volume of financing granted during the 2009 financial year by all financial institutions amounted to 571.4 M €, with the Basque Savings Banks supplying most resources with a rate of 67.2%.

There was a severe drop in interest rates during 2009, and this was subsequently reflected in the Housing Agreement. Initial interest rates dropped both in the Basque Country and Spain, although Spanish rates were slightly lower due to the modification in the fixing rate reference (IRPH to Euribor).

The Agreement for the financing of operations granted during 2009 was identical to the one in 2005 which was extended successively, and the financial aid in force matched that of the previous financial year, i.e. non-refundable subsidies for promoting social housing, renovations, etc. and interest rate subsidies for rent support.

Legislation was updated with Decree 628/2009 of 22nd December for financial collaboration between credit institutions and the Basque Administration, and although this will effectively come into effect during 2010 this is the first step for the introduction of an important series of new measures covering price-controlled housing and regional government-owned rented housing, housing repurchase possibility in the case of non-payment, interest rate modification, etc.

Productive Investment Agreements AFI

In view of the complicated economic situation, the Corporative Competitiveness and Social Innovation Plan 2006-2009 was strengthened by means of the Interinsitutional Dynamization Agreement for Public Investment which was expected to remain in effect during the period 2008-2010 and which attempted to support the competitiveness of Basque companies by reinforcing investment and corporate activity.

Traditional financial instruments and the productive investment agreement remained in force throughout the 2009 financial year (e.g. the AFI programme for Industry, Commerce and Tourism) and these were accompanied by the lines envisaged by Law 18/2008 for 2009 Budgets promoted by the Tax Office and Public Administration or Financial Adaptation Lines. The SPRI Basque Development Agency continued to manage these lines.

Financial investment incentives are geared towards SMEs in any of the three sectors (industry, commerce or tourism) who comply with the legally-established requirements such as minimum investment of 100,00€ in the case of the industrial sector and 30,00 € in either of the other two sectors.

The financial conditions applied during 2009 were the Euribor plus a margin of 1.25%-1.75%, according to the term chosen (which may exceed 7 years) with a maximum applicable commission of 0.40%. Previous financial year subsidies remained with general interest subsidization standing at 1.5 percentage points plus 0.25 additional points if the operation is guaranteed by an MGC.

The volume of resources channelled by the three Basque Savings Banks into the AFI financial investment incentive programme totalled 33.7 M €.

Lines of adaptation to the financial structure

Financial Adaptation Agreement for SMEs and Self-employed Workers:

The additional 9th regulation of Law 19/2008 of 30th December for the 2009 Basque Government Budgets authorized the Government to approve a specific support programme for the financing of Basque companies by means of the following lines of action:

• Special surety fund, totalling a maximum of 100 M €.
• Pluri-annual financing line for individual entrepreneurs, self-employed workers and SMEs totalling 500 million euros for their circulation needs, revocation or adaptation of short-term debt to medium and long term, etc.

Financing is available for financial structure adaptation projects when the presented financing structure is inadequate for future development. Formalized loan and credit operations were guaranteed by an MGC. The financial conditions applicable to companies were the Euribor plus a margin of 0.6%. The volume of resources allocated by the institutions to these lines amounted to 476.9 million euros, with financing granted by the three Basque Savings Banks amounting to 171.2 million euros (35.9%).

Financial adaptation for strategic sectors:

By means of resolution 7/2008, the Basque Administration decided to establish a specific financial support programme for strategic sector companies, which because of their volume of employment or activity are not covered by Decree 230/2008. These financing lines were also guaranteed by an MGC.

The programme gave priority to financing solvent, viable projects, maintaining indirect company activity or its chain of suppliers, generating greatest value added and creating and/or maintaining employment. The financial conditions applicable to companies were the Euribor plus a margin of 1.5%.