11.1.1 Long-term viability

Granting State aid to failing banks keeps them afloat, but it does not change the underlying problems of these banks. Long-term viability cannot be achieved by State aid alone. In order to restore the long-term viability of the bank, the restructuring plan should identify the causes of the bank’s difficulties and the bank’s own weaknesses.1 The restructuring plan should also propose restructuring measures that remedy the bank’s weaknesses. The weaknesses and the corresponding viability-measures can relate to funding, corporate governance, risk management, staff remuneration, operational efficiency or the business model of the beneficiary bank. These viability-measures will be the focus of the current chapter.2