Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Free Webinar - Decode the market's secrets! | Tuesday, May 30, 2023 | 01:00PM EDT Enroll Now
EU auditors warn of shortcomings in state aid rules for banks
Published Oct 01, 2020 05:37AM ET
© Reuters. European Union flags flutter outside the European Commission headquarters in Brussels
By Foo Yun Chee
BRUSSELS (Reuters) - The EU's budget watchdog on Thursday called for a revamp of EU rules allowing governments to prop up troubled banks because of the lack of details on the conditions triggering public support and because they have failed to keep pace with the market.
EU countries pumped billions of euros into their banks during the 2007 financial crisis, with some still saddled with toxic debts and non-performing loans while a few continue to rely on state support.
The European Court of Auditors' criticism comes as the bloc injects billions of euros into companies struggling with the fallout from the coronavirus pandemic, from airlines and the tourism industry to events organisers, with some questioning the validity and the rationale for the aid.
The watchdog in its report cited weaknesses in both compatibility assessment and performance monitoring from 2013 to 2018, saying that the rules had not been modified since 2013.
"The EU Treaties allow public support to banks on an exceptional basis to remedy serious disturbances in a member state's economy. However, EU rules are not explicit enough on this point and do not define what a serious disturbance is," the watchdog said.
"The Commission did not contest member states' assertions that the threat to financial stability existed in individual cases. Moreover, while the Commission required measures intended to limit distortion of competition, it did not analyse the actual impacts of each measure on competition," auditors said.
It said the Commission should evaluate by 2023 whether the current rules are still appropriate, revise them and improve performance measurement.
The EU executive in 2013 overhauled its state aid rules for struggling banks, putting the burden on shareholders and junior debt holders in the bank's restructuring.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.