State Aids in the banking and finance sectors*

In the first article of a round-table discussion dedicated to «State aids in the banking and financing sectors» (Colloque Banques, Finances & Concurrences, 30 November 2006), Professor Dominique Berlin gives an overview of the implementation of State aid rules and regimes in these sectors and insists on some procedural issues due to the specificities of these sectors.

In the second article, Jean-Louis Colson (DG COMP H) describes the European Commission’s activity in the field of State aid control in the banking sector. The author insists on the growing significance in the last years of the EC policy in the sector with some high profile cases. As in the past, the activity in the future should aim at applying the normal rules to banks in order to limit the distortions of competition and ease the integration of the banking sector which has now been fully liberalised.

Paul-Bertrand Barets, in the third paper of this round-table concentrates on prudential and public service obligations in the Banking and insurance sectors. EU competition law and Commission decisions take the specificities of these sectors into account. Difficulties in the early 1990’s prompted the Commission to develop a doctrine for bank restructurings and systemic risk management. Following the Amsterdam European Council (1997), the Commission also recognized public services in financial sector.

Finnaly, Massimo Merola and Pablo Ibanez Colomo comments the reform of State aid policy in these sectors, undertaken by the Commission in the framework of the 2005 Action Plan, pursues two broad objectives. On the one hand, it aims at steering Member States’ financial efforts towards the achievement of the objectives set out in the «Lisbon Agenda». On the other hand, it seeks to introduce rigorous economic analysis in the assessment of State aid measures under Articles 87(1) and (3) EC. After a brief overview of the issues raised in the major cases dealt with by the Commission, the present contribution aims to examine whether the reform has a specific impact on State aid granted in the banking sector. First of all, the application of the market economy investor principle (particularly suited for the introduction of a more refined economic approach) to this sector shows some specific features, related to the particular role of banks in the economy. Secondly, an analysis of some recent decisions in the field shows the limits to the introduction of a more refined economic approach favoured in the Action Plan. Thirdly, the «social» aspect of the reform is also analysed. Finally, some selected issues regarding the impact of State aid rules on banks’ daily activities are briefly outlined.

* This article is a set of 4 articles of a round-table discussion dedicated to «State aids in the banking and financing sectors» (Colloque Banques, Finances & Concurrences, 30 November 2006, Paris). Available in pdf. only (attached), in French.

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Pablo Ibáñez Colomo, Dominique Berlin, Jean-Louis Colson, Paul-Bertrand Barets, Massimo Merola, State Aids in the banking and finance sectors*, February 2007, Concurrences N° 1-2007, Art. N° 13184, pp. 68-81

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