Brussels, 25th February 2009
Competition Commissioner Neelie Kroes said: "We have already taken important steps towards financial stability through bank rescues and recapitalisation. Now, we need transparency, disclosure and correct valuation of impaired assets in order to clean the balance sheets of banks and address the root cause of lack of confidence. But we also require that the banks contribute adequately to the costs. They may have to be restructured in exchange for the State aid they receive. The Commission can play a key role through coordinated and rapid action, and thus contribute to restart lending."
"We have taken, since last October, a series of measures that have stabilised financial markets, but the job will only be complete if companies and households continue to have access to credit, the lifeblood of economic activity. Dealing with impaired assets is crucial to achieve this, to restore confidence and to guarantee a gradual recovery of the economy," said Economic and Monetary Affairs Commissioner Joaquín Almunia.
Internal market and services Commissioner Charlie McCreevy said: "These guidelines will help Member States deal with impaired assets on bank's balance sheets. If we don't face up to this issue then we risk prolonging this crisis with zombie banks that are incapable of performing a useful role in our economies."
The Communication takes account of the recommendations of the European Central Bank and takes into account the extensive discussions with Member States over the last two months on the appropriate way to deal with impaired assets. It addresses the rationale for asset relief as a measure to safeguard financial stability and underpin bank lending; the longer-term considerations of banking-sector viability and budgetary sustainability to be taken into account when considering asset relief measures; and the need for a common and co-ordinated EU approach to asset relief, notably to ensure a level playing field.
The guidance for the application of the State aid rules is based on a number of principles:
The design of the asset relief scheme, be it asset purchase, insurance, swap, guarantee or hybrid models, is the responsibility of the Member State. Their treatment from the State aid point of view will however be subject to uniform assessment criteria, which should maintain a level playing field. The Commission approval for asset relief measures will be granted for a period of six months, and conditional on the commitment to present details of the valuation of the impaired assets, as well as an viability assessment and restructuring plan for each beneficiary institution within 3 months from its accession to the asset relief programme.
The Communication complements and refines the Banking Communication (see IP/08/1495), where the Commission set out the principles governing the application of the State aid rules to any support measure for banks in the context of the global financial crisis. In a similar vein that the recapitalisation communication (see IP/08/1901) detailed the application of the general principles to recapitalisation of banks, the present communication sets out principles that must be followed by any asset relief measure.
The Communication is available on Europa:
Under "Financial sector: application of State aid rules to measures taken in the context of the current global financial crisis".