30.09.2022 | The liquidity crisis in Europe

Bailout funds in Europe

In September 2022, the Swiss parliament passed the bill for a rescue package for the electricity sector. Switzerland is not alone in this. State support has also been awarded in other European countries. Here is an overview of the liquidity crisis in Europe.

After intensive debates, the Swiss parliament approved the bill on subsidiary financial aid to rescue system-critical companies in the electricity industry in the final vote on 30 September 2022. If you take a look at the other countries in Europe, you quickly realise: this is not an isolated case. All over Europe, countries are supporting their electricity producers with liquidity in this extreme situation of high electricity prices in order to stabilise the system and ensure security of supply in Europe.


The Federal Council has been discussing the creation of a rescue mechanism for systemically important electricity companies since 13 April 2022. As a result, the Federal Council sought talks with various companies. On 2 September 2022, Axpo Holding AG submitted its application for temporary liquidity support to the Federal Council. Based on an emergency decree, the Federal Council activated the bailout fund and made a credit line of CHF 4 billion available to Axpo. Strict conditions are attached to the credit facility, such as a ban on dividends. In addition, Axpo may not sell any assets or carry out any restructuring during this period that could jeopardise the repayment of the loan or any collateral. In addition, the necessary information must be provided to federal offices, ElCom and the Swiss Federal Audit Office. Under the Emergency Ordinance, the system-critical electricity companies Alpiq, Axpo and BKW are subject to a flat-rate provision fee of CHF 15-20 million per year. 

Update December 2023: The CHF 4 billion line of credit, granted by the federal government at the start of September 2022 as a precaution due to the extreme situation then prevailing, was not utilised by Axpo at any time. The corresponding decree was revoked at Axpo’s request as of 1 December 2023.

On 16 September 2022 it became public that the Ticino electricity company had received a state loan of CHF 110 million. The Ticino electricity company Azienda Elettrica Ticinese (AET) was struggling with liquidity problems and drew on the credit line on 29 August 2022, but has since repaid it.


Austria's largest energy supplier, Wien Energie, has also secured itself against rising electricity prices. On 31 August 2022, the federal government granted a security loan to the city of Vienna in the amount of 2 billion euros to secure the energy supply for its two million customers. The loan is conditional and runs until April 2023. Although no collateral was required, the lender is given a seat on the supervisory board of Wien Energie and the electricity producer has to disclose its trading transactions since 2020. In addition, the federal government imposed a reporting obligation on the expenditure of the 2 billion euros as well as clarification of the transactions (cf. Wien Energie). Although Wien Energie has not yet drawn any money from this loan, the company was already granted 1.4 billion by emergency decree as of July. This without conditions (cf. NZZ). Three auditing institutes, which audited the electricity trading of its subsidiary Wien Energie on behalf of Wiener Stadtwerke, see the company's stock exchange transactions as "without alternative". There were no indications of speculation or inadequate risk management (cf. OTS).

On 27 February 2023, Montel informed that the City of Vienna will take over the credit line of the federal government, which expires on 30 April 2023, as of 1 May. The bailout fund has not yet been needed, according to the City of Vienna. The new rescue umbrella is valid for two years and can be extended by a maximum of one year.


On 22 July 2022, the German government announced that it was issuing a comprehensive support package totalling up to 15 billion euros for Uniper. Uniper is one of the largest European gas companies and the largest German importer of Russian gas. The company found itself in dire straits due to a lack of gas deliveries. In order to secure the country's energy supply, the German government promised financial support, but also demanded to be represented on the supervisory board. In addition, the government demanded restrictions on remuneration for Uniper's board of directors and a ban on dividends (cf. Federal Ministry of Finance). The company has already drawn 9 billion euros since July 2022 (cf. Uniper). Due to economic and legal doubts, the sense of the levy planned from 1 October 2022 was called into question. In the meantime it has become clear that the federal government will take over the Uniper gas company completely and that the gas levy will not come into effect. On 29 September 2022, the federal government proposed an "economic defence umbrella": a total of up to 200 billion euros will be made available to support energy companies, among others, and to alleviate energy costs for households and industry.

On 4 November 2022, WDR reported on the protective umbrella for municipal utilities in the district of North Rhine-Westphalia. According to the report, municipal utilities will receive 5 billion euros as liquidity loans from the NRW Bank to ensure that the utilities can continue to supply gas in the future.

On 23 November 2022, the Financial Times announced that the cost of rescuing Uniper will be much higher than forecast. The total amount was newly increased to up to 51 billion euros.

In Germany, there is also a financing support for energy trading. This was created by the Federal Government to support energy traders. This financing support provides KfW loans for companies so that they have sufficient liquidity to deposit on the exchange for trading in gas, electricity and emission certificates. The Federal Ministries of Finance announced that the aforementioned hedging via the margining instrument will run until the end of 2023 (cf. Handelsblatt).

Sweden and Finland

The Swedish government also took action against an impending financial crisis on 5 September and will provide the equivalent of 23.4 billion euros for all Nordic and Baltic energy companies (cf. Sveriges Riksdag). Finland is making 10 billion euros available to Finnish companies to cover the acute liquidity needs of companies active in power generation (cf. Valtioneuvosto Statsradet). So far, conditions such as excess profits tax are only being discussed, there are no measures yet (cf. Euronews). In Sweden, all companies that trade and clear electricity via Nasdaq can use the credit line. The condition is that they have a lack of liquid funds due to margin safety requirements, but are still considered economically viable in the long term. Fortum, which is majority state-owned, receives a 2.5 billion euro bridge loan to have sufficient liquidity for security guarantees in the electricity market. In addition, Finland is offering systemically important players a place under its rescue umbrella. At 14.2 percent, the interest rate for Fortum is considerably higher than that in Switzerland. A prerequisite for the loan is that no bonuses or dividends are paid out (cf. NZZ).


Europe's largest electricity provider, Electricité de France (EdF), has been in financial difficulties for some time and had to be recapitalised with 2.5 billion euros even before the outbreak of the Ukraine war. One of the triggers was a ban on EDF raising electricity prices. At the moment, the state still owns 84 percent of the company, but it is soon to be nationalised again to 100 percent. The state will pay at least eight billion euros for this (cf. Tagesschau).

Czech Republic

As early as June 2022, the Czech government was working on an austerity tariff that would relieve the state of the burden on citizens and electricity producers. At that time, 2.6 billion euros were earmarked, the majority of which was intended for companies (cf. Radio CZ). On 8 July 2022, a loan agreement for 5 billion euros was reached with the Ministry of Finance, whereby electricity producers with more than 100 megawatts of installed capacity will be supported. The companies must meet certain ratings. 3 billion euros of this was given to the energy company ČEZ (cf. Reuters).


On 7 October 2022, Reuters reported on a Hungarian government programme that gives 1.85 billion dollars to companies to help them pre-finance bank guarantees.

United Kingdom

In the UK, many energy suppliers are privately owned. Already at the beginning of September, the British Treasury announced the joint programme "Energy Markets Financing Scheme (EMFS) with the Bank of England (cf. GOV.UK). Its aim is to cover the extraordinary liquidity needs of energy companies operating on the British wholesale markets for gas and/or electricity up to an amount of around 46 billion euros and runs until 27 January 2023 (cf. GOV.UK). Since the outbreak of the energy crisis, more than 30 energy producers have gone bust. The bailout is conditional, for example with restrictions on executive pay (bonuses) and capital distributions (dividends). The parent company of British Gas, Centrica, is said to be in talks with banks and the government for an extension of the credit lines. At the moment, however, no money has been discussed (cf. Guardian).


On 8 September 2022, the announcement was made of the financial support in Denmark of 100 billion kroner (13.5 billion euros), which was drafted by the Minister of Finance. This bailout is linked to the application deadline of 1 April 2023 and will be administered by the Danish Export Fund (EKF). The guarantees have a maximum term of five years. In this context, the guarantee costs are calculated on commercial terms, which correspond to the terms of the commercial lender and the administration. The Danish credit line covers 80 per cent of the energy companies' future loans, while a lender must cover at least 20 per cent (cf. Swissinfo).


In Slovenia, too, the Slovenian parliament approved state guarantees totalling 1.6 billion euros on 13 September 2022. The money was spoken for the most important energy companies to provide them with sufficient liquidity to buy electricity and natural gas in the face of rapidly rising energy prices. The energy company HSE Group will receive up to 800 million euros of this. Two other companies, GEN Energija and the natural gas trader Geopolin, will receive guarantees for loans of up to 400 million euros each. The state announced it would guarantee up to 80 per cent of these loans to ensure stability and reliability for energy consumers in Slovenia ( cf. Xinhuanet).


On 19 October 2022, Reuters reported that the Italian Finance Ministry had given the green light to a request from the energy company Enel. This is a request for state support for a credit facility of up to 16 billion euros. The utility had asked to be able to draw on a state guarantee scheme that Rome has developed to help domestic companies hit by rising energy prices. The money is to be provided by a pool of banks. With the ministry's commitment, a process begins that extends over several weeks until the credit facility is approved. Subsequently, the Ministry of Finance must also give its approval again, which remains open, due to the new government. Enel has not yet confirmed the application.

Spain and Portugal

On 8 June 2022, the European Commission approved a Spanish and Portuguese measure under EU state aid rules. The measure aims to reduce wholesale electricity prices on the Iberian electricity market (MIBEL). Thus, both countries together are allowed to pay out subsidies worth about 8.4 billion euros (6.3 billion for Spain and 2.1 billion for Portugal) to electricity producers until the end of May 2023. The aim is to reduce the input costs of fossil fuel-fired power plants so that their production costs and prices on the wholesale electricity market fall to the benefit of consumers.

The same aforementioned Italian utility Enel is prepared to support Endesa, an Enel subsidiary in Spain, with a credit line and guarantees of up to 5 billion euros to help it cope with volatile energy markets, according to reports on 16 November (see Reuters). The Spanish energy supplier is 70% owned by Enel (cf. Yahoo).

European Union

In a non-paper of the European Commission of 27 September 2022, the Commission proposes measures to the EU member states to alleviate the existing liquidity problems of the energy industry ("easing liquidity stress"). Based on input from the EU financial supervisory authorities ESMA, EBA and the Single Supervisory Mechanism of the ECB, the European Commission plans to ease the rules on collateral deposits and on the provision of guarantees by clearing banks. In addition, the European Commission wants to continue the existing facilitations with regard to state aid law, so that EU member states can continue to provide state guarantees to companies in the energy sector.

On 28 October 2022, the European Commission adopted a proposal to extend and complement the Temporary Crisis Framework (TCF) on the Ukraine war. The proposal, which entered into force on the same day, contains several aspects relevant for energy companies. Among them are the extension of the Temporary Crisis Framework by one year, i.e. until 31 December 2023, the increase of the maximum allowable aid amounts and the increase of the flexibility of liquidity support to energy companies for their trading activities. In exceptional cases and under strict conditions, Member States may provide state guarantees exceeding the actual maximum coverage rate of 90 percent if they are provided as financial collateral to central counterparties or clearing members (cf. European Commission).


High margin payments in the face of high volatility have been an issue in the banking sector for some time. A report by the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS) and the International Organisation of Securities Commissions (IOSCO) looks at margin calls during high market volatility and the Dash for Cash in March and April 2020, as well as the transparency, predictability and volatility of margin practices across jurisdictions and markets, and the willingness of market participants to meet margin requirements. 

It confirms that initial margin requirements in both centrally and non-centrally cleared markets were high in March and significantly higher than in February 2020. Initial margin requirements for centrally cleared markets increased significantly and varied substantially between and within asset classes. Margin requirements for non-centrally cleared derivatives remained relatively stable during the stress period.

Based on the analysis and taking into account feedback from the industry, the report confirms six areas for further policy action. These will guide further regulation in CH, the EU and internationally. 


Status First of March, 2023

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