State aid to banks (IVOR nr. 109) 2018/13.3.2:13.3.2 Has the Commission consistently taken into account these relevant characteristics?

State aid to banks (IVOR nr. 109) 2018/13.3.2

13.3.2 Has the Commission consistently taken into account these relevant characteristics?

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

Consider the following recital from the decision on SNS REAAL:

“SNS REAAL is an important player on the Dutch banking and insurance market. Until 2004, SNS Bank’s market share in mortgages (new production) ranged between 5 and 8%. Between 2004 and 2008, it increased to 10%, but then from 2008 to 2011 it decreased to approximately 5% before dropping still further to 2% in 2012. The market share in savings (volumes) was approximately 10% in 2012. In the market segment of individual life, REAAL Insurance had a market share of 18.3% (2012) and held the third- largest book12. In the market segment of group life, the corresponding figures are a market share of 10.9% (2012) and the fifth-largest book. In the property and casualty market (“P&C”), REAAL is the eighth-largest player with a market share of around 5%”.1

This is a recital from the 2013 Restructuring Decision on SNS REAAL. Note that the market position is mentioned and elaborated. However, this recital is not mentioned in the assessment-part of the decision, but in the description- part. Thus, the market position is only mentioned as a description of the beneficiary bank; it is not mentioned as an indication of the competitive impact of the State aid. The market position is thus not really used as an assessment criterion. SNS REAAL is not the only decision that does not explicitly use the market position as an assessment criterion. In fact, in several decisions, the Commission did not explicitly take into account the market characteristics in its assessment of the competitive impact of the aid.

It should be pointed out that many cases contain the commitment that the beneficiary bank will reduce its market presence. This is also a relevant characteristic – as will be explained in sections 13.6 and 13.7. However, it should be stressed that it is not the same relevant characteristic as the one discussed in the current section. The fact that the bank has a limited market presence is relevant, because it gives information on the competition distortions. The fact that the bank will reduce its market presence is relevant, because it is a compensatory measure; it is a solution to the competition distortions.

To conclude, in some decisions, market presence is not mentioned as an indication of the competitive impact. Why do not all cases mention whether the bank has a limited or large market presence? In many cases, the need for compensatory measures follows from the fact that the banks have received State aid, without taking into account the market position of the beneficiary bank. Distortions of competition are thus inferred from the very fact that banks received State aid. But why do some cases mention the market position of the bank, while other decisions do not? A possible explanation could be that the fact that the bank has a limited market presence is a mitigating circumstance. A large market share would amount to an aggravating circumstance. A normal market share would be a neutral factor. It could therefore be argued that the market presence should only be mentioned if it constitutes a mitigating or aggravating circumstance.

Deze functie is alleen te gebruiken als je bent ingelogd.