A key aspect of this overall framework is the Guarantee on Securitisation of Non-Performing Loans (GACS), an instrument that the Treasury has made available to banks and financial companies so as to facilitate the dismantling of non-performing bank loans. This is a guarantee that the Treasury provides to requesting intermediaries.
The State guarantees only the senior tranches of securitisations, namely, the more secure tranches that support the least likely losses from less-than-expected credit recovery. The higher risk tranches will not be repaid until the senior tranches guaranteed by the State have been repaid in full. The guarantee is priced at market, as also recognised by the European Commission, which has agreed on the fact that the programme does not contemplate State aid that would distort competition.