Commissioner Almunia: Competition policy in the banking sector

24 January 2012

According to the EC figures, since 2008 EU governments have used a total of €1.6 trillion to rescue their banks. Around three quarters of the total amount were guarantees, and the rest was given as public capital injections and treatment of impaired assets.

This extraordinarily large rescue package – equivalent to 13 per cent of the Union’s GDP, 10 per cent in guarantees – can only be understood as a necessary step for the stability of our banking and payment systems – and in this respect it has worked well.

This huge transfer of public resources effectively moved risk from banks’ books to governments’ accounts, tightening the links between them.

Policymakers need to consider:

• a lack of fiscal discipline in some countries, and the rising levels of public debt even before 2008;
• the existence of internal imbalances in the euro area; in particular, persistent current-account deficits vis-à-vis other EMU members;
• the continuous widening of structural problems that have been left to simmer for too long – such as a persistent loss of competitiveness in some members of the EMU; and – last but not least –

• an inadequate system of governance for our common currency.

The European Commission is directly involved in the restructuring of the banks that have received State support. Using the special crisis rules for State aid to banks introduced at the end of 2008, we have so far taken 39 decisions on restructuring, and 24 more banks are under restructuring processes as we speak.

The Commission has also approved national schemes in 20 EU countries. These schemes use an array of tools provided under the crisis regime; including capital injections, support for the divestment of impaired assets, and guarantees on banks’ liabilities. Therefore, we are using State aid control to maintain a level playing field in the market and, at the same time, to foster the restructuring of banks.

The conditionalities we imposed under these rules pursue three main goals:

• firstly, safeguarding financial stability;
• secondly, preserving the integrity of the internal market; and
• thirdly, restructuring the beneficiaries of aid for long-term viability.

Full speech

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