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Factbox: EU solvency support plan for virus-hit strategic companies

BRUSSELS (Reuters) - The European Commission unveiled on Wednesday a plan to borrow and disburse 750 billion euros ($827 billion) in grants and loans to help EU countries recover from their coronavirus slump.

European Commission President Ursula von der Leyen and Executive Vice President of the European Commission for A Europe Fit for the Digital Age Margrethe Vestager wearing protective face masks are seen during a plenary session on a new proposal for the EU's joint 2021-27 budget and an accompanying Recovery Instrument to kickstart economic activity in the bloc ravaged by the coronavirus disease (COVID-19) outbreak, in Brussels, Belgium, May 27, 2020. REUTERS/Johanna Geron

One of the elements of the proposal is a solvency support instrument to help companies hit by losses which the Commission estimates will run between 720 billion euros and more than 1.2 trillion euros by the end of 2020.


The new tool is to help strategic companies fend off foreign takeovers and level the playing field between wealthy EU countries with the capacity to bail out firms and those with less fiscal room. It does not specify which companies count as strategic.


Funds will be channelled to companies in vulnerable sectors - notably wholesale and retail trade, accommodation and food services and transport - and to regions and countries most affected by the COVID-19 pandemic.


It could be operational later this year with a budget of 31 billion euros ($34 billion). That amount would aim to unlock over 300 billion euros in matching funds from the private sector for solvency support, possibly through borrowing from banks or debt from the market, though the plan is short of such details.


The scheme will prioritise digital and green investments. [L4N2D922G]

($1 = 0.9074 euros)

Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Mark Heinrich