6.6 Problems in determining “cases” and “treatment”

In section 6.3, the concepts of “cases” and “treatment” were introduced. The following definitions were given: the “cases” are constituted by the banks that benefit from State aid measures, the “treatment” is constituted by the restructuring measures that are imposed on the beneficiary banks.1 Although these definitions might seem straightforward, there are some problems when defining the cases and treatments in this way.

In the first place, the distinction between the treatment by the Member State and the treatment by the Commission is not always clear-cut. This PhD-study is not about the treatment of banks by their Member States, but about the treatment of banks by the Commission. The “treatment” was defined above as the restructuring measures that are imposed on the beneficiary banks. The restructuring measures are sometimes depicted as being imposed by the Commission. This may be true de facto, but from a strictly legal perspective, the restructuring measures are proposed by the Member State concerned. Only if the Commission adopts a conditional decision, the restructuring measures are imposed by the Commission. If, on the contrary, the Commission adopts a commitment decision, the restructuring measures are commitments by the Member State. In that regard, the CJEU has held that the commitments form an integral part of the State aid measure.2

This essential difference between commitment decisions3 and conditional decisions4 – which was set out in section 3.7.3 – complicates the interpretation of “the treatment”. For instance, when the Commission imposes a dividend ban on a beneficiary bank, then this dividend ban is part of the “treatment”. But what if the Member State commits that the bank will comply with a dividend ban: is this dividend ban still part of the “treatment”? On the one hand, this dividend ban cannot be considered as a treatment by the Commission, since it was not imposed by the Commission. This would mean that the dividend ban is part of “the case” rather than being part of “the treatment”. On the other hand: for the beneficiary bank itself (and its shareholders), there is no real difference between a dividend ban that is imposed by the Commission and a dividend ban that is imposed by the Member State. Moreover, it is not inconceivable that the Member State has proposed the dividend ban in anticipation of what the Commission would expect. In addition, it has been remarked that “commitment decisions risk being more a Commission’s unilateral decision rather than a truly ‘negotiated’ solution”.5 For these reasons, it would not make sense to make a distinction between restructuring measures proposed by the Member State and restructuring measures imposed by the Commission.

In the second place, the distinction between the rescue of a bank and the restructuring of a bank is not always clear-cut. This makes it difficult to equate the restructuring plan with the treatment. For instance, the transfer of impaired assets to an Asset Management Company is obviously a State aid measure (and would thus be part of the “case”), but since the transfer of impaired assets constitutes a deleveraging effort, it also figures in the restructuring plan (and would thus be part of the “treatment”).

Another example is the case of Banco de Valencia (BVA). In 2011, this Spanish bank faced a capital shortfall. Since BVA failed to raise capital from its key shareholders or from other private investors, the Bank of Spain took control over BVA and appointed the FROB as administrator. It was decided that BVA would be sold through an open, transparent and competitive tender procedure. In that context, CaixaBank purchased all the shares of the FROB in BVA at a price of EUR 1. The takeover of BVA was made under the condition that the FROB would carry out a capital injection into BVA for an amount of EUR 4,5 billion and that the FROB would grant an asset protection scheme (APS). Should the takeover of Banco de Valencia by CaixaBank be considered as part of the “case” or as part of the “treatment”? On the one hand, the takeover necessitated several State aid measures (i.e. the capital injection of EUR 4,5 billion and the APS). Since it is so closely related to the rescue of BVA, the takeover could be considered as part of the “case”. On the other hand, in the decision on Banco de Valencia, the Commission noted the following: “As part of the Restructuring Plan, Banco de Valencia will be bought by CaixaBank”.6 From this perspective, the takeover would be part of the “treatment”. This example illustrates that some measures can be considered as both a rescue measure (and thus a State aid measure) and a restructuring measure. This makes it difficult to equate the “case” with the rescue measures and the “treatment” with the restructuring measures.

Thus, the picture can be a bit blurred sometimes. For instance, a Member State may nationalise a bank in the context of a rescue operation. The nationalisation may be achieved by expropriating the shareholders of the bank. The nationalisation is viewed positively by the Commission, because it constitutes burden- sharing by shareholders.7 But how to characterise the nationalisation: as part of the “case” or as part of the “treatment”?

To conclude, it is difficult to pinpoint the “case” and the “treatment” when the abovementioned definitions are used. This forms yet another reason why the ‘one-metric approach’ and the ‘many-variables approach’ are not feasible. Indeed, these two approaches are based on the abovementioned definitions of cases and treatment.

Section 6.7 introduces another approach: the ‘relevant characteristics approach’. When this approach is used, the problems in determining the cases and treatments are avoided. This is because the relevant-characteristics approach redefines “cases” and “treatment” – as will be discussed in section 6.7.2.