Public funding of failing banks in the European Union (LBF vol. 19) 2020/3.5.4.3:3.5.4.3 Rescue asset relief measures

Public funding of failing banks in the European Union (LBF vol. 19) 2020/3.5.4.3

3.5.4.3 Rescue asset relief measures

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Asset relief measures can be temporarily approved by the Commission as rescue aid. In that case the criteria of the Impaired Assets Communication, as discussed in section 3.5.5, should be met, in combination with the criteria set out below.1 It may be that in such a case, not all criteria of the Impaired Assets Communication can be fulfilled at the time of the temporary approval and that the Commission will complete the assessment when it reaches its decision on the restructuring plan.2

Impaired asset measures normally qualify as restructuring aid, in which case the criteria set out in the Restructuring Communication should be met in addition to the criteria in the Impaired Assets Communication. The criteria set out in the Restructuring Communi cation are discussed in section 3.5.6.1.

Criterion 1: Financial stability exception

Asset relief measures can only be authorised by the Commission on a temporary basis as rescue aid before a restructuring plan is approved, if this measure is required to preserve financial stability.3 This is the same requirement as discussed for rescue recapitalisations.

An example of an asset relief measure that was temporarily approved by the Commission as a rescue asset relief measure for reasons of financial stability was the impaired asset measure by which problematic assets were transferred from FIH Group to a separate bad bank.4

Criterion 2: Compliance with burden-sharing principle for restructuring aid

Either the required burden-sharing measures as requested in relation to restructuring aid must be implemented as part of the rescue aid, or the impaired asset measure must be arranged in a manner that allows for the implementation of the burden-sharing measures ex post.5

Criterion 3: Restructuring plan

Following the authorisation of rescue aid in the form of asset relief measures, the Member State must submit a restructuring plan in line with the Restructuring Communication within two months of the date of the decision temporarily approving the aid.6

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