Public funding of failing banks in the European Union (LBF vol. 19) 2020/3.6.4:3.6.4 Cooperation with third country authorities

Public funding of failing banks in the European Union (LBF vol. 19) 2020/3.6.4

3.6.4 Cooperation with third country authorities

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A final attention point relates to the coordination between the Commission and third country authorities in case a banking group has a third country presence in the form of branches or subsidiaries. In such a case, coordination with third country authorities may be necessary, e.g. because the third country authority approves State aid granted to the third country presence, or in relation to the implementation of restructuring measures in respect of the third country presence. Although many banks granted State aid during the GFC were active outside the EU, e.g. in the US, to the best of the author’s knowledge, none of the decisions from the Commission discussed cooperation with third country authorities.

The Commission supports both multilateral and bilateral cooperation. On 2 June 2017, the Commission signed a Memorandum of Understanding (the MoU) with China on a dialogue in the area of State aid control in order to exchange on how to optimise and steer the use of State resources to promote the efficient and sustainable economic developments of both economies. The MoU does not contain any provisions in relation to the cooperation in actual cases.

The Commission cannot exercise powers conferred on it by Article 108 TFEU in respect of aid measures granted by third countries.1 The Commission can therefore not interfere when a third country subsidiary of a European banking group receives aid from a third country. It may however be argued that the Commission can take this third country aid into consideration when exercising its discretion with regard to State aid granted to an EU entity within that banking group.2 In the situation where an EU subsidiary of a third country banking group receives State aid, the third country is regarded – in legal proceedings before the EU Courts against the Commission decision in respect of this aid – like any person, distinct from the Member States, who must establish an interest in the result of the case.3

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