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.

Paula Riedel, Thomas Wilson, Shane Cranley

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 115 - 126

Against the background of the COVID-19 outbreak and the effects of public health measures on Member State economies, the Commission has acted impressively quickly to prevent State aid rules becoming a block to necessary interventions. The Commission has published a Temporary Framework under Article 107(3)(b) TFEU, which has been amended twice including to allow for recapitalisation of firms in return for State participation. Aid under this Temporary Framework along with a wide range of measures approved under Article 107 TFEU has allowed billions in aid to be granted, ensuring that liquidity is available to companies. This liquidity has avoided mass bankruptcies but comes with the risk of distortions of competition across the internal market; a risk augmented by the differences in approach of the Member States. As Member States exit the initial phase of the response to the crisis focused on liquidity, and move to more structural measures such as recapitalisations, we can expect the design of aid to be monitored even more closely to minimise market distortions. The Commission’s initial response has been flexible, swift and pragmatic and is to be lauded but many potential pitfalls remain as the crisis moves to the next phase.  Keywords: COVID-19, Temporary Framework, recapitalisation, distortion of competition

Georgiana Pop, Ana Amador

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 127 - 136

All countries across the globe are speeding up economic measures to tackle the impact of the coronavirus pandemic. Many of these measures, which have adopted different forms, fundamentally aim at providing liquidity to companies and reducing the pressure on cash-flows of most affected sectors. Even if subsidies and State aid can provide immediate support to ailing companies in extraordinary circumstances, governments should not forget the disruptive effects that subsidies can bring on competition and international trade in the longer run. Keywords: COVID-19, coronavirus, subsidies, design, general measures, EU Temporary Framework