Einde inhoudsopgave
State aid to banks (IVOR nr. 109) 2018/12.1.1
12.1.1 Why an own contribution?
mr. drs. R.E. van Lambalgen, datum 01-12-2017
- Datum
01-12-2017
- Auteur
mr. drs. R.E. van Lambalgen
- JCDI
JCDI:ADS590591:1
- Vakgebied(en)
Financieel recht / Europees financieel recht
Mededingingsrecht / EU-mededingingsrecht
Voetnoten
Voetnoten
Point 22 of the Restructuring Communication. As the Commission explained in HRE, 18 July 2011, para. 114, it follows from point 22 that the objective of burden-sharing is twofold: to limit distortions of competition and to address moral hazard. The 2014 R&R-guidelines explicitly indicate that “the notion of burden-sharing has been introduced, inter alia, to better address the issue of moral hazard” (point 11). In the Crisis Communications, limiting moral hazard is mentioned as an objective of the burden-sharing requirement. By contrast, Gilliams (2016, p. 24) argues that while limiting moral hazard is a desirable outcome of the burden- sharing requirement, it should not be an objective of the burden-sharing requirement.
Point 22 of the Restructuring Communication. This consideration is reprised in several decisions. See, for instance: Dexia, C9/2009, 26 February 2010, para. 199.
In that regard, the burden-sharing requirement has been called a “corollary” of the principle of the limitation of the aid to the minimum. See, inter alia: Kommunalkredit Austria (KA), SA.32745, 31 March 2011, para. 84; ATE, N429/2010, 23 May 2011, para. 79.
SA.33757, 9 December 2011, para. 66.
The own contribution-requirement serves three objectives. The first objective of the own contribution is to address moral hazard. A disadvantage of granting State aid is that the beneficiary banks do not have to bear the negative consequences of their actions. If banks know that they will be rescued by the State when they experience serious financial difficulties, then they may be inclined to take more risk (than they would have taken if they could not count on State aid). So the prospect of State aid might lead to moral hazard. To address this problem of moral hazard, the Restructuring Communication requires that the beneficiary bank should provide an appropriate own contribution to the restructuring costs.1
An own contribution is “necessary to ensure that rescued banks bear adequate responsibility for the consequence of their past behaviour and to create appropriate incentives for their future behaviour”.2
The second objective of the own contribution is that it ensures that restructuring aid is limited to the minimum necessary.3 Full burden-sharing by shareholders and subordinated debt holders contributes to ensuring that the aid is kept to the minimum.4 In other words: requiring shareholders and other investors to bear part of the burden ensures that the burden for the State (and thus ultimately the taxpayer) is minimised.
Although it is not mentioned in the Restructuring Communication, a third objective of the own contribution can be found in the 2004 R&R-guidelines. Point 7 of these guidelines indicates that the own contribution demonstrates that “the markets (owners, creditors) believe in the feasibility of the return to viability within a reasonable time period”.