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”).
Emese Vallyon is currently a Blue Book Trainee in the Task Force Financial Crisis of the Directorate-General for Competition at the European Commission. Having previously worked for a national resolution authority as Legal Advisor, she has practical experience with bank resolution and the development of the legislative and procedural framework surrounding it. She holds a Master in Law, an LL.M in Competition Law and a Bachelor in Applied Economics.