State aid to banks (IVOR nr. 109) 2018/12.7.2:12.7.2 Impact of the 2013 Banking Communication?

State aid to banks (IVOR nr. 109) 2018/12.7.2

12.7.2 Impact of the 2013 Banking Communication?

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.

The 2013 Banking Communication does not require burden-sharing by senior creditors. Nevertheless, some cases that were assessed under the 2013 Banking Communication are characterised by burden-sharing by senior creditors. For instance, in the decision on National Bank of Greece (NBG), the Commission noted the following:

“The contribution of both the hybrid capital and subordinated debt holders, and that of the senior unsecured debt holders, was already partially achieved with the 2015 LME. The results of 2015 LME ended with participation rates of respectively […] %, […] % and […] % for senior bonds, junior bonds and hybrid securities, generating EUR 717 million of capital. With regard to the contribution obtained from the senior creditors, the 2015 LME exceeded the minimum level burden-sharing sought for State aid purposes, which does not require contributions of senior unsecured debt holders”.1 [Italics mine, REvL]

Even though this case is characterised by burden-sharing by senior creditors, the Commission underlines that contributions of senior unsecured debt holders are not required (by the 2013 Banking Communication).

In several other cases assessed under the 2013 Banking Communication, there was no burden-sharing by senior creditors. For instance, in the decision on the Slovenian bank Probanka, the Commission noted as follows:

“According to the orderly winding down plan, the main objective of the Bank’s orderly winding down is to repay all ordinary creditors (excluding subordinated ones) so as to maintain the trust of the public in the stability of the financial system. For that purpose, the Bank will ensure that repayments of contractually agreed amounts are made to all ordinary creditors (excluding subordinated ones) on maturity”.2 [Italics mine, REvL]

These recitals illustrate that burden-sharing by senior creditors is not a regular feature of cases assessed under the 2013 Banking Communication. Thus, this Communication did not have an impact on burden-sharing by senior creditors. By contrast, the BRRD had a huge impact – as will be set out in the next subsection.

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