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The Corona Virus Can Infect Banks Too journal article open-access

The Applicability of the EU Banking and State Aid Regimes

Phedon Nicolaides

European State Aid Law Quarterly, Volume 19 (2020), Issue 1, Page 29 - 38

This paper examines possible options for Member States to redress the impact of the corona virus (SARS-CoV2) on financial institutions in the context of the directive on bank recovery and resolution, the regulation on the Single Resolution Mechanism and the State aid rules on banks. The EU banking regime requires, in principle, that the granting of State aid to a bank should lead to its resolution or liquidation. The paper considers how Member States may support banks outside the scope of Article 107(1) TFEU and how State aid may be granted without triggering resolution or liquidation. The current measures which are rolled out by European governments to support the real economy will indirectly benefit banks too. The paper reviews the recently announced ‘Temporary Framework’ according to which any ‘indirect aid’ to banks will not infringe the provisions of the directive or regulation. The paper identifies gaps in the current rules concerning solvent, but not systemic banks, ambiguities in the interpretation of the concept of ‘serious disturbance’ and unclear guidance as to how indirect aid may be minimised. Keywords: Bank resolution; Liquidation; Temporary Framework; COVID-19.


Ten Years of State Aid to Financial Institutions journal article

Is there still a ‘Serious Disturbance’?

Phedon Nicolaides

European State Aid Law Quarterly, Volume 18 (2019), Issue 2, Page 121 - 137

State aid to financial institutions has been massive. State aid rules together with the directive on bank recover and resolution and the regulation establishing the Single Resolution Mechanism require that banks that receive State aid must be resolved or liquidated. The exception to this rule is that State aid may be granted without leading to resolution or liquidation when the beneficiary bank is solvent, the aid is necessary to preserve financial stability and the aid is intended for liquidity support or precautionary recapitalisation. This paper identifies a number of ambiguities in the application of Article 107(3)(b). First, it is unclear whether aid under Article 107(3)(b) has to counteract and/or prevent a ‘serious disturbance’ in the economy of a Member State. Second, it is unclear how Article 107(3)(b) can apply to aid that addresses regional rather than national problems. Third, it is unclear how the double requirement of remedying a serious disturbance and preserving financial stability is applied to solvent banks which are not systemically significant. Fourth, it is unclear whether the requirement that resolution aid must be in the ‘public interest’ also implies that aid must be limited to banks with systemic significance. Keywords: Banks; Serious disturbance; Burden sharing; Resolution.


The MEOP in the FIH Case ∙ C‑579/16 P Commission v FIH ∙ Annotation by  Małgorzata Cyndecka journal article

Annotation on the Judgment of the Court of Justice (Grand Chamber) of 6 March 2018, in Case C‑579/16 P European Commission v FIH Holding and FIH Erhvervsbank (FIH).

Małgorzata Agnieszka Cyndecka

European State Aid Law Quarterly, Volume 17 (2018), Issue 4, Page 546 - 552

In the awaited FIH judgment, the CJEU once again reviewed the question of costs or risks that may be taken into account under the application of the MEOP. It is now clear that the origins of such costs or risks are crucial. What may make sense in terms of economics, which is one of the two components of the MEOP, is not necessarily in line with State aid law. In fact, if based solely on number crunching, the application of the MEOP may frustrate the aim of State aid control that is safeguarding a ‘level playing field’ for all market participants.



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