State aid to banks (IVOR nr. 109) 2018/4.4.4:4.4.4 Compliance of the aid measure with the intrinsically linked provisionof the BRRD

State aid to banks (IVOR nr. 109) 2018/4.4.4

4.4.4 Compliance of the aid measure with the intrinsically linked provisionof the BRRD

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In the Commission decisions that were taken after the adoption of the BRRD, the Commission assessed whether the aid measures violated intrinsically linked provision of the BRRD. Even if the Member State had not yet transposed the BRRD into national law and the respective provisions on bail-in, the Commission needed to assess whether the aid measures violated indissolubly linked provisions of the BRRD.1 This obligation follows from the case-law from the Court of Justice EU.2 In that regard, the Court has held the following: “While the Commission has a wide discretion when it determines the compatibility of a system of aid with the common market, it is none the less required to ensure, in the context of that assessment, that the procedure does not produce a result which is contrary to specific provisions of the Treaty other than those of Articles 87 EC and 88 EC, in particular where those aspects of aid which contravene those provisions are so indissolubly linked to the object of the aid that it is impossible to evaluate them separately.”

Thus, an aid measure cannot be deemed compatible when it violates intrinsi-cally linked provisions of the BRRD. In the bank State aid decisions that were adopted since 2015, the following provisions of the BRRD were identified as intrinsically linked to the specific aid measure under examination:

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Article 32(4)(d) BRRD.3 This provision concerns one of the conditions for resolution; i.e. the condition that the bank is ‘failing or likely to fail’.

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Article 34(1)(a) BRRD.4 This provision concerns burden-sharing by shareholders.

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Article 36 BRRD.5 This provision concerns the valuation.

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Article 37(5) BRRD.6

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Article 38 and 39 BRRD.7 This provision concerns one of the resolution tools.

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Article 42 BRRD.8 This provision concerns one of the resolution tools.

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Article 44(5) BRRD.9 This provision concerns the contribution by the resolution financing arrangement.

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Article 59(3) BRRD.10 This provision concerns the write-down and conversion tool.

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Article 100(5) BRRD.11 This provision concerns the requirement to establish resolution financing arrangements.

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Article 101(1) BRRD.12 This provision concerns the use of the resolution financing arrangements.

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Article 109 BRRD.13 This provision concerns the use of deposit guarantee schemes in the context of resolution.

In the bank State aid decisions that were adopted since 2015, the Commission concluded that the aid measures in question did not seem to violate the intrinsically linked provisions of the BRRD.14

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