11.7.1 Why is this a relevant characteristic?

Long-term viability means that the bank must have a sufficient level of profitability. In order to improve operational efficiency (and thus profitability), most beneficiary banks have implemented cost-cutting measures (or “cost optimization measures”).1 This is thus a relevant characteristic from a viability-perspective.

In addition, the fact that the bank has implemented cost-cutting measures is also relevant from another perspective: that of burden-sharing. As will be explained in chapter 12, the second pillar of the Restructuring Communication requires that beneficiary banks contribute to the restructuring costs. This is referred to as burden-sharing or an own contribution. In that regard, cost-cutting measure constitute a contribution to the restructuring costs through internal resources (thus an “own contribution”). To give an example, in the decision on Abanka, the Commission noted that “as regards covering the restructuring costs associated with the implementation of the restructuring plan through Abanka’s internal measures, Abanka will carry out cost-cutting measures”.2

Thus from both a viability-perspective and a burden-sharing perspective, the fact that the bank has implemented cost-cutting measures is a relevant characteristic.