Over the past couple of years we’ve had to restore the financial system and make sure that a crisis like this would never happen again. The EC is still using the special crisis regime for banks based on the Treaty provisions. Market conditions permitting, new rules for the rescuing and restructuring of banks will enter into force as of 1 January 2012.

 

What is the EC assessment of the massive public rescue of banks? The study requested by your committee is being prepared, and will be ready in June. But everyone knows that the bill for Europe’s taxpayers has been large. According to figures, in 2008 and 2009 Member States reported to have used about €2,340 billion of the support approved. The breakdown for 2009 is as follows:

 

• €827 billion in guarantees on bank liabilities,

• €141 billion in capital injections,

• €110 billion on the relief of impaired assets, and

• €29 billion in liquidity and bank funding support.

 

For a total of about €1,107 billion. Figures for 2010 are not yet available.

Our task is to control that the aid is limited to the strict minimum necessary, by making sure that the banks contribute their share to the burden of the rescue by divesting valuable businesses, not just hiving off their impaired assets to government-run bad banks, and adopt sounder and more sustainable business models. We also make sure that the beneficiaries would not use public subsidies to undercut unaided competitors or use their capital to pay capital holders before the taxpayer.

So far, we have adopted 32 final restructuring decisions. We are monitoring closely how our conditions are respected and the restructuring implemented. This is not always easy. We get signals from the market that some of the subsidised banks behave aggressively, and when we have evidence of this behaviour we immediately intervene to correct it. The main point is that when a decision is adopted, the dialogue with the Commission is not over. It continues until we are satisfied that the decision is implemented correctly and that the bank is able to stand on its feet, with no further need of State support. I am committed to ensuring that our decisions are implemented in every detail.

The restructuring of Europe’s banking sector is not over either. We have 24 ongoing cases where we will have to take decisions on the final restructuring of banks, some of which are rather challenging.

This applies to the Irish banks, where the situation of the financial sector and of the sovereign debt have already required EU and IMF support. This also applies to the four pending German cases: WestLB, Bayern LB, HSH and Hypo Real Estate, which are struggling to find sustainable business models.

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