Yesterday, the EU Directorate-General for Competition released a comprehensive overview of the financial "aid schemes introduced by Member States and approved by the Commission during the financial crisis.” Following the onset of the financial crisis, the European Commission approved “guidance in the form of Communications on the design and implementation of State aid in favour of banks.”

Between October 2008 and mid-July 2009, the Commission has approved 11 guarantee schemes, 6 recapitalisation schemes and 5 schemes providing for both guarantees and recapitalisation. As a result of these efforts, the Commission has approved guarantee measures totaling €2.9 trillion and recapitalisation measures totaling €313 billion. Although a number of state aid schemes have been extended for a longer period of time, the Commission’s review was carried out in light of “the renewal process of the guarantee and recapitalisation schemes, which started in April 2009” and provides the Commission with an opportunity “to ensure consistency and effectiveness of the schemes authorised to date in light of their extension when they are re-notified.”

In the review, the Directorate-General for Competition notes that “the effectiveness of the schemes implemented to date and [analyzes] issues raised by Member States in this context.” The review further “consolidates the requirements common to all approved guarantee and recapitalisation schemes, in order to provide additional transparency on the general standard for all such schemes.” While the review acknowledges that “[t]he announcement and implementation of rescue measures have played an important role in avoiding a financial markets meltdown and contributed to restoring market confidence," it notes that “the confidence in the solvency and earning potential of banks continues to be undermined by concerns about the quality of assets on their balance sheets.” In response to some Member State concerns that bank liability guarantee schemes “are drafted too restrictively and that all debt should be allowable up to five years maturity,” the Commission emphasized in the review that presently “up to one-third of the approved overall amount of the guarantee can be used for maturities up to five years.” Further, the review notes that each Member State “can decide on the attribution of the five-year maturities, with no limitations per individual bank when the total budget ensures that the bank will retain part of the risk to prevent excessive moral hazard.”