30.09.2022 | The liquidity crisis in Europe

Bailout funds in Europe

Today, 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 today adopted the bill on subsidiary financial aid to rescue system-critical companies in the electricity industry in the final vote. 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 6 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. Axpo has not yet made use of the credit line. 

On 16 September 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. 


Austria's largest energy supplier, Wien Energie, also recently 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 two billion euros to secure the energy supply for its two million customers. The loan is subject to conditions and runs until April 2023. Although no collateral was required, the lender receives a seat on the supervisory board of Wien Energie and the electricity producer must disclose its trading transactions since 2020. In addition, the federal government imposed a reporting obligation on the expenditure of the two 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 22 July, the German government announced that it was issuing a comprehensive support package totalling up to €15 billion 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 demands to be represented on the supervisory board. In addition, the government demanded restrictions on the remuneration of 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 (cf. Uniper). Due to economic and legal doubts, the sense of the levy planned from 1 October 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, the federal government proposed an "economic defence shield": 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.

Sweden and Finland

The Swedish government also took action against an impending financial crisis on 5 September and will provide the equivalent of 23 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, the Czech government was working on a savings plan 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 would go to businesses (cf. Radio CZ). On 8 July, 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.

United Kingdom

In the UK, many energy suppliers are privately owned. The government is working on a financing programme for energy markets, which includes short-term financial support for wholesale companies and will be communicated in October. Certain conditions will have to be met (cf. GOV.UK). 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 spoken for. According to the NZZ, Energy UK, an association representing energy companies, has called for government support. 


On 8 September, Denmark announced a 100 billion kroner (13.5 billion euro) financial bailout designed by the Minister of Finance. This bailout is linked to an 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).

European Union

In a non-paper of the European Commission of 27 September, the Commission proposes measures to the EU member states to alleviate the existing liquidity problems in 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. Proposals for an improved legal framework for state support measures are to follow in mid-October.


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 30 September 2022

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