Public funding of failing banks in the European Union (LBF vol. 19) 2020/3.5.7.0:3.5.7.0 Introductie

Public funding of failing banks in the European Union (LBF vol. 19) 2020/3.5.7.0

3.5.7.0 Introductie

Documentgegevens:

mr. M. Louisse-Read, datum 01-06-2020

Datum: 01-06-2020
Auteur: mr. M. Louisse-Read
JCDI: JCDI:ADS213792:1
Vakgebied(en): Financieel recht / Europees financieel recht
Staatssteun (V)

The previous sections set out the assessment criteria for rescue, restructuring and liquidation aid to individual banks on an ad hoc basis. This aid can, however, also be granted on the basis of general schemes adopted by the Member States.1 When aid is granted to a bank on the basis of a general scheme, this is called an individual case instead of an ad hoc case. The difference between an individual case and an ad hoc case is that awards of aid under general schemes are exempt from individual notification to the Commission. Since the Commission has already assessed – and approved – the compatibility with the internal market of the general scheme, it is not necessary to establish this compatibility for each individual case of application of the scheme, as long as the conditions of the general scheme are complied with in the individual case.

Twenty-one Member States adopted general schemes during and after the GFC, most of which have been extended multiple times; a number are still active even today.

Table 4: General schemes adopted by Member States during and after GFC2

Member State	General scheme
Austria	Bank support scheme
Bulgaria	Liquidity scheme
Croatia	Resolution scheme for small credit institutions
Cyprus	Special government bond scheme
	State guarantee scheme
Denmark	Compensation scheme
	Liquidity support scheme
	Recapitalisation scheme and guarantee scheme on new debt
	Guarantees for merging banks
	Winding-up scheme
Finland	Guarantee scheme
	Recapitalisation scheme
France	Bank guarantee scheme
	Bank recapitalisation scheme
	Régime de renforcement des fonds propres
Germany	Deposit guarantee scheme for private banks
	Asset relief scheme
	Refinancing scheme for export loans
	Bank rescue scheme
Greece	Bank guarantee scheme
	Hellenic Asset Protection Scheme (Hercules)
	Recapitalisation of credit institutions in Greece under the Financial Stability Fund
	Bond loan scheme for credit institutions
Hungary	Recapitalisation and guarantee scheme
	Liquidity scheme
Ireland	Eligible liabilities guarantee scheme
	Credit union resolution scheme
	Credit union restructuring and stabilisation scheme
	Asset relief scheme (NAMA)
Italy	Bank guarantee scheme
	Securitisation scheme
	Bank recapitalisation scheme
	Liquidation scheme for small banks
Latvia	Bank support scheme
Lithuania	Bank guarantee scheme
	Bank recapitalisation and asset relief scheme
Poland	Credit Unions Orderly Liquidation Scheme
	Bank guarantee scheme
	Resolution scheme for cooperative banks and small commercial banks
	Bank recapitalisation scheme
Portugal	Guarantee scheme
	Recapitalisation scheme
	Guarantee scheme on EIB lending
Slovakia	Bank support scheme
	Bank liquidity scheme
	Bank guarantee scheme
Spain	Recapitalisation scheme
	Guarantee scheme
	Fund for the acquisition of financial assets in Spain
Sweden	Bank guarantee scheme
	Bank recapitalisation scheme
The Netherlands	Guarantee scheme
United Kingdom	Credit easing scheme (NLGS)
	Working capital guarantee scheme
	Bank support scheme
	Assets backed securities scheme

It may be that aid, in the first instance, is granted to a bank on the basis of a general scheme, but is continued to be granted on an ad hoc basis. This can be the case when the conditions for granting aid on the basis of a general scheme are no longer met or when the general scheme provides for a notification obligation in case a second grant of State aid is considered.

An example of a case in which State aid was first granted on the basis of a general scheme, followed by an ad hoc grant is the case of the Austrian bank HGAA. HGAA received a EUR 0.9 billion capital injection from Austria on the basis of the Austrian banking emergency rescue scheme. This scheme was approved by the Commission in December 2008. On 14 December 2009, an agreement was reached between the owners of HGAA and the Austrian State that Austria would acquire all the shares of HGAA for a symbolic price of EUR 1 and a capital injection of EUR 450 million. This aid was assessed on an ad hoc basis and temporarily approved by the Commission. Following the nationalisation, additional aid measures were notified and approved by the Commission, again on an ad hoc basis, after which liquidation of HGAA followed.3

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A general scheme should be viewed as an aid scheme in accordance with Article 1(d) Procedural Regulation, that is “any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be awarded to one or several undertakings for an indefinite period of time and/or for an indefinite amount.”

This overview has been prepared by the author on the basis of the State aid decisions available on the Commission website: https://ec.europa.eu/competition/state_aid/register/.

EC, 3 September 2013, C(2013) 5648 final, (SA.32554 – HGAA), points 1-13.