State aid to banks (IVOR nr. 109) 2018/Annex IV:Annex IV: Overview of the compatibility-assessment

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

Annex IV: Overview of the compatibility-assessment

Documentgegevens:

mr. drs. R.E. van Lambalgen, datum 01-12-2017

Datum: 01-12-2017
Auteur: mr. drs. R.E. van Lambalgen
JCDI: JCDI:ADS594281:1
Vakgebied(en): Financieel recht / Europees financieel recht
Mededingingsrecht / EU-mededingingsrecht

The following tables provide two useful insights:

•: In the first place, the tables indicate in which instances the compatibility- assessment comprises two stages.
•: In the second place, the tables indicate in which instances a restructuring plan is required.

Two-stage compatibility-assessment

As set out in section 8.1.1, the two-stage compatibility-assessment entailed the following. First, the Commission would assess whether the aid was appropriate, necessary and proportionate. Afterwards, when a restructuring plan for the beneficiary bank had been submitted, the Commission assessed whether the restructuring plan met the three objectives of restoring the long-term via bility of the bank, ensuring burden-sharing and minimising competition distortions.

Restructuring plan required?

As set out in section 10.2, the question whether a restructuring plan is required is influenced by three factors: i) the type of State aid measure, ii) the question whether the aid is granted under a scheme or as ad hoc aid, iii) the Communications that are in force at the moment the aid was granted to the bank. These three factors interact with each other. For that reason, a distinction should be made on three levels.

In the first place, since there are essentially three types of State aid – i.e. recapitalisation measures, asset relief measures and guarantees – there are three different tables. Each table concerns one specific type of aid.

In the second place, a distinction is made between aid granted under a scheme and ad hoc aid. NB: this distinction will only be made with respect to recap-italisation measures and asset relief measures. The need to submit a restructur-ing plan in case of an ad hoc guarantee will not be discussed, for the following two reasons. First, guarantees are almost always granted in the context ofa guarantee scheme. And second, in the rare cases that a bank benefits from anad hoc guarantee, the bank also benefits from other State aid measures and a restructuring plan is already required.

In the third place, there are three policy documents – i.e. the DG Competition Staff Working Document of 30 April 2010, the First Prolongation Communication and the 2013 Banking Communication and – that changed the requirements to submit a restructuring plan. For that reason, a distinction is made between the situation before and the situation after the adoption of each of these policy documents.

Recapitalisation measures

The situation after the adoption of the 2008 Banking Communication and the Recapitalisation Communication
Aid under a scheme		Ad hoc aid
Fundamentally sound	Distressed	Fundamentally sound	Distressed
A fundamentally sound bank receives a capital injection under a scheme.	A distressed bank receives a capital injection under a scheme.	A fundamentally sound bank receives an ad hoc capital injection.	A distressed bank receives an ad hoc capital injection.
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the scheme was appropriate, necessary and proportionate.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the scheme was appropriate, necessary and proportionate.	First stage: The Commission assesses whether the aid is appropriate, necessary and proportionate.	First stage: The Commission assesses whether the aid is appropriate, necessary and proportionate.
The Member State has to submit a report/review on the use of the scheme.1 This review includes details of all banks that have benefited from the scheme.	Aid under the scheme is temporarily approved. Within 6 months of the recapitalisation, the Member State has to submit a restructuring plan for the beneficiary bank.2	If this is the case, the aid is temporarily approved, on the condition that the Member State submits a viability plan within 6 months of the recapitalisation.	If this is the case, the aid is temporarily approved, on the condition that the Member State submits a restructuring plan within 6 months of the recapitalisation.3
Second stage: there is no second stage.	Second stage: the Commission assesses the restructuring plan.	Second stage: the Commission assesses the viability plan.	Second stage: the Commission assesses the restructuring plan.

The situation after the adoption of the First Prolongation Communication
A fundamentally sound bank receives a capital injection under a scheme.	A distressed bank receives a capital injection under a scheme.	A fundamentally sound bank receives an ad hoc capital injection.	A distressed bank receives an ad hoc capital injection.
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the scheme was appropriate, necessary and proportionate. Within 6 months, the Member State has to submit a restructuring plan for the beneficiary bank – irrespective of whether the bank is fundamentally sound or distressed.4 Second stage: the Commission assesses the restructuring plan.		First stage: The Commission assesses whether the aid is appropriate, necessary and proportionate. If this is the case, the aid is temporarily approved, on the condition that the Member State submits arestructuring plan – irrespective of whether the bank is fundamentally sound or distressed.5 Second stage: the Commission assesses the restructuring plan.

The situation after the adoption of the 2013 Banking Communication
A fundamentally sound bank receives a capital injection under a scheme.	A distressed bank receives a capital injection under a scheme.	A fundamentally sound bank receives an ad hoc capital injection.	A distressed bank receives an ad hoc capital injection.
NB: a recapitalisation scheme is only possible for small banks (i.e. banks with a balance sheet of not more than EUR 100 million).6 Every six months, the Member State must submit a report on the use of the scheme.		First stage: recapitalisation measures are no longer approved on a temporary basis, so there is no first stage. The Member State should submit a capital raising plan7 and a restructuring plan.8 Second stage: the recapitalisation is authorised only after the Commission has approved the restructuring plan.9 NB: the recapitalisation canexceptionally be approved on a temporary basis as rescue aid.10 This assessment corresponds to the first stage . The Member State has to submit a restructuring plan within 2 months. In the second stage , the Commission assesses the restructuring plan.

Impaired asset measures

The situation after the adoption of the 2008 Banking Communication and the Impaired Assets Communication (IAC)
Aid under a scheme		Ad hoc aid
Fundamentally sound	Distressed	Fundamentally sound	Distressed
A fundamentally sound bank benefits from an asset relief measure under a scheme.	A distressed bank benefits from an asset relief measure under a scheme.	A fundamentally sound bank benefits from an ad hoc asset relief measure.	A distressed bank benefits from an ad hoc asset relief measure.
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the scheme was line with the IAC-criteria.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the scheme was line with the IAC-criteria.	First stage: The Commission assesses whether the aid is in line with the IAC-criteria.	First stage: The Commission assesses whether the aid is in line with the IAC-criteria.
The Member State has to submit a viability plan within 3 months from the bank’s accession to the asset relief scheme.11	The Member State has to submit a restructuring plan within 3 months from the bank’s accession to the asset relief scheme.12	If this is the case, the aid is temporarily approved, on the condition that the Member State submits a viability plan.	If this is the case, the aid is temporarily approved, on the condition that the Member State submits a restructuring plan.
Second stage: The Commission assesses the viability plan.	Second stage: The Commission assesses the restructuring plan.	Second stage: the Commission assesses the viability plan.	Second stage: the Commission assesses the restructuring plan.

The situation after the adoption of the First Prolongation Communication
A fundamentally sound bank benefits from an asset relief measure under a scheme.	A distressed bank benefits from an asset relief measure under a scheme.	A fundamentally sound bank benefits from an ad hoc asset relief measure.	A distressed bank benefits from an ad hoc asset relief measure.
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the scheme was line with the IAC-criteria. The Member State has to submit a restructuring plan – irrespective of whether the bank is fundamentally sound or distressed.13 Second stage: the Commission assesses the restructuring plan.		First stage: The Commission assesses whether the aid is in line with the IAC-criteria. If this is the case, the aid is temporarily approved, on the condition that the Member State submits a restructuring plan– irrespective of whether the bank is fundamentally sound or distressed.14 Second stage: the Commission assesses the restructuring plan.

The situation after the adoption of the 2013 Banking Communication
A fundamentally sound bank benefits from an asset relief measure under a scheme.	A distressed bank benefits from an asset relief measure under a scheme.	A fundamentally sound bank benefits from an ad hoc asset relief measure.	A distressed bank benefits from an ad hoc asset relief measure.
NB: a scheme is only possible forsmall banks (i.e. banks with a balance sheet of not more than EUR 100 million).15 Every six months, the Member State must submit a report on the use of the scheme.		First stage: impaired asset measures are no longer approved on a temporary basis, so there is no first stage. The Member State should submit a capital raising plan16 and a restructuring plan.17 The measure is authorised only after the Commission has approved the restructuring plan.18 Second stage: the Commission assesses whether the measure is in line with the IAC-criteria and whether the restructuring plan meets the three restructuring objectives. NB: the impaired asset measure canexceptionally be approved on a temporary basis as rescue aid.19 This assessment corresponds to the first stage . The Member State has to submit a restructuring plan within 2 months. In the econd stage , the Commission assesses the restructuring plan.

Guarantee (scheme)

The situation after the adoption of the 2008 Banking Communication
Bank does not call upon the guarantee	Bank calls upon the guarantee
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. There is no need to submit a viability plan or restructuring plan for the beneficiary bank. Second stage: there is no second stage.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. Within 6 months, the Member State has to submit a restructuring plan for the beneficiary bank.20 Second stage: The Commission assesses the restructuring plan.

The situation after the DG Competition Staff Working Document of 30 April 2010
Bank does not call upon the guarantee		Bank calls upon the guarantee
The total amount outstanding guaranteed liabilities exceeds both a ratio of 5% of total liabilities and the total amount of EUR 500 million.	These thresholds are not exceeded.
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. The member State has to submit a viability plan for the bank within 3 months from the granting of the guarantee. Second stage: the Commission assesses the viability plan.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. There is no need to submit a viability plan or restructuring plan for the beneficiary bank. Second stage: there is no second stage.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. Within 6 months, the Member State has to submit a restructuring plan for the beneficiary bank. Second stage: the Commission assesses the restructuring plan.

The situation after the adoption of the 2013 Banking Communication
Bank does not call upon the guarantee		Bank calls upon the guarantee
The total amount outstanding guaranteed liabilities exceeds both a ratio of 5% of total liabilities and the total amount of EUR 500 million.	These thresholds are not exceeded.
First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. Within 2 months fromthe granting of the guarantee, the member State has to submit a restructuring plan for the bank.21 Second stage: the Commission assesses the restructuring plan.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. There is no need to submit a viability plan or restructuring plan for the beneficiary bank. Second stage: there is no second stage.	First stage: The Commission assessed (when the Member State notified the scheme to the Commission) whether the guarantee scheme was appropriate, necessary and proportionate. The Member State has to submit a restructuring plan within 2 months after the guarantee has been activated.22 Second stage: The Commission assesses the restructuring plan.