Impaired assets such as non-performing loans (“NPLs”) continue to pose significant problems across the EU. When possible solutions are being considered, “bad banks” or similar impaired asset relief measures are often discussed. However, if they involve support by the State such measures need to be compliant with a set of EU law provisions. This article aims to clarify which interventions are considered to be State aid, and to give an overview of the compatibility conditions that apply to State aid measures. A brief explanation is also given concerning the recent changes brought about by the EU’s new recovery and resolution framework introduced by the Banking Recovery and Resolution Directive (“BRRD”).
About Christophe Galand
After several years in the banking sector (working in asset management and bond syndication), Christophe joined the European Commission's Directorate-General for Competition in 2004, more specifically in a unit controlling the aid granted by the Member States to industrial firms in difficulty. Since 2009, he has been working in the Task Force Financial Crisis which controls the aid granted by the Member States to their financial institutions in difficulty, first as Deputy Head and then as Head of Unit. He holds a Master in Economics.