13.2.3 How is this relevant characteristic elaborated in the decisions?

It should be recalled that the amount of aid can be measured in absolute terms as well as in relative terms. In the latter case, it is measured as a percentage of the bank’s RWA (i.e. Risk Weighted Assets). It should also be recalled that many bank State aid cases are characterised by various State aid measures. All this means that the amount of aid can figure in three ways in the Commission decisions: the absolute amount of aid; the relative amount of aid; and the total amount of aid (in case the bank has benefited from more than one aid measure).

Sometimes, the exact amount of aid is difficult to establish. For instance, the aid amount of asset relief measures has to be calculated. The quantification of the aid element in an asset relief measure was discussed in chapter 9.

Also the quantification of the aid amount of recapitalisations is not always straightforward. The case of Lloyds Banking Group (LBG) is a good illustration of this. The Commission first recalled that the aid amount of a capital injection normally equals the nominal value of the recapitalisation. The Commission then referred to the specific circumstances of the case: namely the concrete features of the Seaview transaction (clear indication by investment banks of their readiness to underwrite the whole issue independent of the State’s participation; State’s participation on pari passu terms with private investors). Consequently, the distortive effect of the recapitalisation was more limited than in normal recapitalisations of companies in financial difficulties.1

With respect to the aid amount of a guarantee, it is established practice that “as for companies in financial difficulty, if a bank is not able to raise sufficient non-guaranteed debt to cover all its funding needs, the aid element of such guarantees might go up to the level of their nominal value”.2

When a bank has benefited from various State aid measures, then the total amount of aid has to be established. However, not all the aid amounts can be added up: “The Commission recognises that it is not relevant to add together the amounts of aid corresponding to recapitalisation with guarantees of liabilities as the two types of measures do not have the same effects of distortion of competition”.3 The aid amount of guarantees is thus not taken into account for the calculation of the amount of aid relative to the bank’s RWA in order to establish whether an in-depth restructuring is necessary.4

The aid amount of impaired asset measures and of capital injections are often expressed in terms of the bank’s RWA.5 Usually, there are no problems in establishing the bank’s RWA. However, in the case of Alpha Bank, the following question arose. The aid measures were granted over the course of a one-year period (from April 2012 until May 2013). During that period, the RWA of Alpha Bank increased substantially (as a result of the acquisition of Emporiki Bank). The question was therefore whether the RWA at the beginning of that period or the RWA at the end of that period should be used (for the calculation of the relative amount of aid). The Commission considered that “the fact that the Bank acquired Emporiki Bank, well after March 2012, should not lead to a reduction of the ratio “aid to RWA”. Indeed, the aid is not less distortive because the Bank made an acquisition which increases its RWA”.6