10.6 Conclusion

In several bank State aid cases, the Commission explicitly considered that “far-reaching restructuring” was needed. The conclusion that far-reaching restructuring is needed, influences the Commission’s assessment of whether the restructuring plan meets the three restructuring objectives. In that regard, the relevant characteristics discussed in this chapter can be considered as aggravating and mitigating factors. For instance, the fact that the bank did not engage in excessive risk-taking is a mitigating factor, because it reduces the risk of moral hazard. Consequently, there is less need for burden-sharing measures and compensatory measures – as was illustrated by the case of ABN AMRO.1 Similarly, the fact that the bank did not pay an adequate remuneration to the State, is an aggravating factor which is taken into account by the Commission in its assessment of whether the burden-sharing and compensatory measures are sufficient.

Although this principle might sound simple, the decisional practice is actually quite vague on the need for far-reaching restructuring. This is due to the following reasons.

In the first place, “far-reaching restructuring” is not a clearly defined concept. What exactly is far-reaching restructuring? In the decisional practice, some examples of far-reaching restructuring can be found: dramatic downsizing of the bank, a change of ownership of the bank, and/or the disappearance of the bank as a standalone entity.2 To some extent, the conclusion that far-reaching restructuring is needed seems to imply that the bank should be ‘punished’. However, even if one accepts the premise that a beneficiary bank should be punished, it is extremely hard to establish how much punishment the bank deserves. Indeed, for the reasons set out in section 6.4, I am of the opinion that the exact punitive effect (or degree of severity) of the restructuring plan cannot be established.

In the second place, in many bank State aid cases, the need for far-reaching restructuring is not explicitly addressed by the Commission. In that regard, it should be noted that the assessment of the need for far-reaching restructuring sometimes takes the form of a preliminary assessment that precedes the assessment of the compatibility of the restructuring plan; sometimes it is part of the compatibility-assessment. Indeed, the decisions in the cases of CGD, BPI, Eurobank, Alpha Bank, NBG, Pireaus Bank, Ethias and FIB3 include a section that specifically addresses the need for far-reaching restructuring, while in all the other cases, the need for far-reaching restructuring is addressed less prominently in the decisions.

In the third place, some of the relevant characteristics of the present chapter are not always mentioned in relation to the need for far-reaching restructuring. For instance – as discussed in section 10.5.3 – the fact that the bank’s problems are caused by internal factors is sometimes only mentioned in relation to the need for a specific restructuring measure, rather than in relation to the need for far- reaching restructuring in general.

However, it should be noted that establishing the need for far-reaching restructuring is not an aim in itself. Indeed, the ultimate aim of restructuring is threefold: i) restoration of long-term viability; ii) burden-sharing; and iii) minimising competition distortions. The Commission’s conclusion that far- reaching restructuring is needed, is only an intermediate step, in the sense that this conclusion influences the Commission’s assessment of whether the restructuring plan meets the three restructuring objectives.

The aim of this PhD-study is to identify the characteristics that are relevant to the Commission’s conclusion that the restructuring plan meets the three restructuring objectives. The current chapter discussed the characteristics that were relevant to the need for restructuring in general, while the following three chapters will focus on the characteristics that are specifically related to one of the three restructuring objectives: chapter 11 discusses the characteristics that are relevant to the assessment of the viability; chapter 12 discusses the characteristics that are relevant to the assessment of the burden-sharing; and chapter 13 discusses the characteristics that are relevant to the assessment of the competition distortions.