•  
  •  
 

Document Type

Case Study

Case Series

Credit Guarantee Programs

JEL Codes

G01, G28

Abstract

Following a series of ad hoc interventions throughout 2007 and early 2008, the collapse of Lehman Brothers in the fall of 2008 and the resulting liquidity crisis caused the German government to adopt a new framework for bank support. The Financial Market Support Act established a new fund, the Financial Market Stabilization Fund (Sonderfonds Finanzmarktstabilisierung, “SoFFin”), to provide up to €400 billion of guarantees on newly issued unsubordinated debt instruments of German financial institutions and German subsidiaries of foreign financial institutions. SoFFin also provided support through recapitalizations and asset purchases, in addition to guarantees. The scheme was extended multiple times before the issuance window closed initially on December 31, 2010. A subsequent reactivation of the scheme in 2012 extended this issuance window to December 31, 2015. The total volume of guarantees provided through SoFFin peaked at €174 billion in the third quarter of 2010. By the end of 2013, there were no guarantees outstanding and none had been triggered. €2.15 billion in fees were collected as a result of the program.

Date Revised

2020-10-08

Share

COinS