The EU Court of Justice renders its judgment on burden-sharing and State aid to banks (Kotnik)

Burden-sharing and State aid to banks* Introduction On 19 July 2016, the Court of Justice rendered its judgment in case C‑526/14, Tadej Kotnik and others v Državni zbor Republike Slovenije. [1] The judgment was in response to a request for a preliminary ruling from the constitutional court of Slovenia concerning the “burden sharing” that the Commission requires before it authorises State aid to banks. Burden-sharing simply means that shareholders and bond holders are bailed-in when a bank receives public support for restructuring. Slovenian investors had challenged the legality of the Commission’s 2013 banking communication. [2] The communication lays down the principles that i) aided banks must be capable of becoming viable again, otherwise they have to be closed down (i.e.