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.

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.

Maria Rosaria Miserendino

European State Aid Law Quarterly, Volume 17 (2018), Issue 2, Page 204 - 211

The object of this work is the analysis of the issues which arose after the coming into force of the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRM); in particular, the (new) role of the European Commission (EC) on State aid for the Banking Sector. This work analyses the complex procedure of resolution created after the Single Resolution Mechanism Regulation and the cooperation between the Commission and the SRB on State Aid in that procedure, with a focus on precautionary recapitalisation.Keywords: State aid; Single Resolution Mechanism Regulation; BRRD; Resolution procedure; Precautionary recapitalisation.