3.4.1.2 The Recapitalisation Communication

Although the Banking Communication provided some guidance regarding recapitalisation measures, there was a need for further guidance. Therefore, on 5 December 2008, the Commission adopted the Recapitalisation Communication.1 The purpose of the Recapitalisation Communication is to provide detailed guidance as to whether specific forms of recapitalisation are compatible with the common market.2 First, the Recapitalisation Communication sets out the common objectives of recapitalisation measures, the possible competition concerns and the recommendations of the Governing Council of the ECB. The second part of the Recapitalisation Communication discusses the specific principles that govern the different types of recapitalisation. In essence, the Recapitalisation Communication is mainly about the pricing of capital injections. In that regard, the Recapitalisation Communication mentions several elements that should be taken into account by Member States when determining the remuneration for State recapitalisations. The remuneration is of key importance to the assessment of the proportionality of recapitalisation measures. Therefore, the guidance provided in the Recapitalisation Communication on the remuneration will be discussed in chapter 8 of this PhD-study.

At this place, it is worth noting that the Recapitalisation Communication distinguishes between fundamentally sound banks and other banks. Banks that are not fundamentally sound are subject to stricter requirements: for these banks, a restructuring plan is required.3