The Commission has published in the OJEU on August 19th 2009, its Communication on the return to viability and the assessment of restructuring measures in the financial sector in the current crisis under the State aid rules. The Commissions explains how it will examine aid for the restructuring of banks in the current crisis, taking into account the need to modulate past practice in the light of the nature and the global scale of the crisis, the systemic role of the banking sector for the whole economy, and the systemic effects which may arise from the need of a number of banks to restructure within the same period.

At its meetings on March 20th 2009 and on June 18th and 19th 2009, the European Council confirmed its commitment to restoring confidence and the proper functioning of the financial market, which is an indispensable precondition for recovery from the current financial and economic crisis. The Commission is already dealing with a number of State aid cases resulting from interventions by Member States to avoid liquidity, solvency or lending problems. In this context, the Commission has provided guidance, in three successive communications, on the design and implementation of State aid in favour of banks.

Those communications recognised that the severity of the crisis justified the granting of aid, which can be considered compatible according to the Treaty establishing the European Community, and provided a framework for the coherent provision of public guarantees, recapitalisation and impaired asset relief measures by Member States.

The Banking Communication, the Recapitalisation Communication and the Impaired Assets Communication recall the basic principles set out in the Community Guidelines on State aid for rescuing and restructuring firms in difficulty.

The Commission considers in its Communication thet the integrity of the internal market and the development of banks throughout the Community must be a key consideration in the application of those principles; fragmentation and market partitioning should be avoided. European banks should be in a strong global position on the basis of the single European financial market, once the current crisis has been overcome.

Main Commission's evaluation criteria on the return to viability and the assessment of restructuring measures in the financial sector

• The restructuring plan will need to include a thorough diagnosis of the bank's problems. In order to devise sustainable strategies for the restoration of viability, banks will therefore be required to stress test their business. This first step in the restoration of viability should be based on common parameters which will build to the extent possible on appropriate methodologies agreed at Community level. Banks will also be required, where applicable, to disclose impaired assets.
• Given the overriding goal of financial stability and the prevailing difficult economic outlook throughout the Community, special attention will be given to the design of a restructuring plan, and in particular to ensuring a sufficiently flexible and realistic timing of the necessary implementation steps. Where the immediate implementation of structural measures is not possible due to market circumstances, intermediate behavioural safeguards should be considered.
• The Commission will apply the basic principle of appropriate burden sharing between Member States and the beneficiary banks with the overall situation of the financial sector in mind. Where significant burden sharing is not immediately possible due to market circumstances at the time of the rescue, this should be addressed at a later stage of the implementation of the restructuring plan.
• Measures to limit distortion of competition by a rescued bank in the same Member State or in other Member States should be designed in a way that limits any disadvantage to other banks while taking into account the fact that the systemic nature of the current crisis has required very widespread State intervention in the sector.
• Provision of additional aid during the restructuring period should remain a possibility if justified by reasons of financial stability. Any additional aid should remain limited to the minimum necessary to ensure viability.

The Commission justifies this Communication by the current exceptional financial sector crisis and should therefore only be applied or a limited period. For the assessment of restructuring aid notified to the Commission on or before December 31st 2010, the Commission will apply this Communication.

As regards non-notified aid, the Commission notice on the determination of the applicable rules for the assessment of unlawful State aid will apply. The Commission will therefore apply this Communication when assessing the compatibility of non-notified aid granted on or before December 31st 2010.