During the crisis, Member States have resorted to massive State aids to the financial sector with a view to avoiding a systemic failure of the European economy. This article provides an overview and a critical assessment of State aids to credit institutions in perspective.
The first part analyses the current framework on State aids to banks. It examines the notion and the compatibility of financial aids under Art. 107 paragraphs 1 and 3 TFEU while assessing the key policy principles in the sector. Special attention is paid to the new framework established under the Banking Communication as of August 2013.
The second part of the article addresses two critical aspects of State aids to banks in future. Firstly, it ascertains the adoption of the regulatory framework for the recovery and resolution of banks and how it impacts on State aid control. Secondly, it discusses the recent reform to create a direct recapitalisation instrument under the European Stability Mechanism.European Business Law Review