The European Commission has agreed a communication explaining its approach to assessing restructuring aid given by member states to banks. The approach is based on three fundamental principles. First, aided banks must be made viable in the long term without further state support. Also, aided banks and their owners must carry a fair burden of the restructuring costs and measures must be taken to limit distortions of competition in the single market.
The guidelines, which are in force until December 31, 2010, explain in particular how the commission intends to apply these principles in the context of the current systemic financial crisis, with a view to contributing to the return to viability of the European banking sector.
Competition Commissioner Neelie Kroes said: “The financial crisis may not be over yet, but we need to start working seriously with member states to restructure European banks. We need to make banks viable again without state support and to re-invigorate competition in the single market. The guidelines adopted today will be a useful tool for banks and member states by explaining the criteria the commission will apply to restructuring aid for banks in the current period. It complements our previous guidance on state guarantees, recapitalization and the treatment of impaired assets”.
The Commission has to deal with a large number of individual cases of bank restructuring, which follow from bank rescue aid measures approved on the condition that a restructuring plan would be submitted within six months. In order to foster transparency, predictability and equality of treatment between member states, the commission has issued guidelines to clarify its approach, the criteria it will base its assessment upon and the type of information required to guide this assessment. (press release)