Meeting of the Committee on Economic and Monetary Affairs with Margrethe VESTAGER, Member of the EC in charge of Competition, on State aid and resolutions decisions in the banking sector, in the EP in Brussels. Statements by Margrethe VESTAGER, Member of the EC in charge of Competition, Markus FERBER (EPP, DE), Sander LOONES (ECR, BE), and Sven GIEGOLD (Greens/EFA, DE)

Brussels

exchange of views

meeting

LOONES, Sander (ECR, BE)

GIEGOLD, Sven (Greens/EFA, DE)

FERBER, Markus (EPP, DE)

VESTAGER, Margrethe (DK, CE)

European banking union (T)

State aid and resolutions decisions in the banking sector: extracts of the exchange of views with Margrethe VESTAGER, Member of the EC in charge of Competition

Arrival of Margrethe VESTAGER, Member of the EC in charge of Competition (4 shots)

SOUNDBITE (English), Margrethe VESTAGER, Member of the EC in charge of Competition, The debt overhang implies that there are significant losses in the system and these losses will only be bigger if the ground roots are not addressed.

SOUNDBITE (English), Margrethe VESTAGER, Member of the EC in charge of Competition, The Commission stands ready to assist member states in dealing with problems in banks; eventually, losses will have to be borne by someone, namely the banks, their owners and their creditors. They stood to benefits from their investments and they should also bear the losses, if losses materialise. The losses should not be put to the public at large and the public finances of member states, and you know as well as I do that some of these public finances are still very sensitive.

SOUNDBITE (German), Markus FERBER (EPP, DE), I would like to talk about an exchange of mails that you and Lord Hill have carried out with the Italian Minister Padoan on the recapitalisation for banks with money from the Italian deposit insurance system. The question was whether and in which cases the recapitalisation of banks using resources from this deposit system is possible? and apparently this instrument is legally available, is possible...

SOUNDBITE (English), Margrethe VESTAGER, Member of the EC in charge of Competition, For small Italian banks, which were in trouble, I think that in total there are about 1% of the financial market in Italy; it was on the request of course of National authorities and the supervisory, that these banks were put into resolution. I think the total amount of aids approved by this decision was 814 million euros.

SOUNDBITE (English), Sander LOONES (ECR, BE), The Commission is saying that the Italian guarantee for non-performing loans does not constitute state aid and are you aware of the fact that you may be setting a dangerous example that one could argue that we are actually encouraging member states to develop similar highly inventive but also very dangerous constructions? How do you see the future? Can we expect similar deals popping up in other member states? Let us all hope that there is not the case.

SOUNDBITE (English), Margrethe VESTAGER, Member of the EC in charge of Competition, The Italian vehicle as it has been made now it's quite promising. And I think it's only rightly that the Commission then take a 'know-it decision' to secure the legal certainty for the markets to know that this is a vehicle than they can evaluate on their own, with as you know the help of third parties, the credit rating agencies coming in to evaluate the value of the products, and knowing that it is 'know- it', that the Commission will not come back and ask questions of state aid, etc. That's a prerequisite for the vehicle actually to work.

SOUNDBITE (English), Sven GIEGOLD (Greens/EFA, DE), Concerning Italy, there is now a new state aid approved on a pricing model for the securitisation of non-performing loans which is disputable. Were you tough enough in the pricing model when you regard a public intervention on the same level as the market price? How did you take into account the large size of the guarantee which would have had an effect on the market prize?

SOUNDBITE (English), Margrethe VESTAGER, Member of the EC in charge of Competition, In working on the technical details of this DG COMP of course draw on the experience from a number of other cases and from methodologies used in a number of other member states, in order to establish a market mechanism or a market prize that you can actually find balance. This was also done in the case of the Italian vehicle. I think it is difficult at this amount to judge what will be the final size of the state guarantee because we do not know how much the scheme will take up and I think the evaluation of how effectful it would be, differs quite a lot.