3.8 Third party treatment

The State aid regime for the banking sector does not address the treatment of third parties, such as shareholders and creditors of banks, affected by State aid awards to these banks. As stated by Kassim and Lyons, State aid control remains in large part a privileged dialogue between the Commission, national governments and favoured firms, in which political pressures have not evaporated and third parties have still a relatively weak position.1 The decision by a bank to request a Member State for State aid can nonetheless have far-reaching consequences for the position of these third parties. For example, in order for restructuring aid to be found compatible with the internal market by the Commission, banks and their stakeholders need to contribute to the restructuring as much as possible in order to ensure that aid is limited to the minimum necessary. In its assessment, the Commission checks whether this requirement has been met, taking into account the commitments proposed by the Member State in relation to the State aid that is intended to be awarded. In addition, the Commission can attach conditions to its approval of the State aid award that have an impact on third parties.

The Commission has however no power to impose any measures on third parties or banks. It can only disapprove of the State aid award by the Member State or attach certain conditions to its decision. As a result, any measures taken in relation to third parties need either (i) to be implemented in cooperation between the bank and its stakeholders, or (ii) to be imposed by the Member State through national legislation.2 This section discusses examples of cases of State aid awards in which these measures were taken.