Banks: EU: “With the fund deposits is likely that shots hypothesis of state aid” – The Messenger

“If a Member State decides to use a system of deposit guarantees to recapitalize a bank (…), however the involvement of this mechanism It is subject to European rules on state aid contained in the notice on the banks. ” This is one of the key steps of the letter sent by Margrethe Vestager and Jonathan Hill, EU Commissioners for Competition and Financial Stability, at the Minister of Economy Pier Carlo Padoan. The letter is dated November 19, a few days before that the Government Matteo Renzi opted for the solution of the rescue of Banca Marche, Etruria, and Carichieti Carife part of a complex process that has seen shareholders and subordinated bondholders lose all their investments.

And yet, add the commissioners in the letter: “If an assessment leads to the conclusion that the use of the mechanism of deposit insurance is state aid, then it will be made taking the resolution of the bank under the Directive the recovery and resolution of banks “. Therefore, add the commissioners, “would apply conditionality under the Directive on the recovery and resolution of banks”. If the use of the protection fund was not regarded as State aid, but as a purely private action, then it would trigger the Directive on the recovery and resolution of banks.

In other words, European Commission has warned that even if it had opted for a bank rescue fund through the interbank deposit guarantee, it would still be tripped resolution mechanism that would reset the investments of shareholders and subordinated bondholders. The government Matteo Renzi defends its actions by pointing out that this letter has prevented a less bloody solution to the crisis of the four banks. The government initially was thought of power saving banks resorting to the Deposit Protection Fund in order to recapitalize institutions in crisis in their entirety and not, as was the case then, only the “good” (the bridge bank) after He has caused the failure of the “bad” with associated losses for shareholders and subordinated bondholders. But the letter clearly shows that the European Commission will have prevented.
 

 23/12/2015 18:21:28

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