COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION of State aid rules for banks in difficulty
Date: 2026-03-04
Institutions: Directorate-General for Competition, European Commission
Subjects: EU competition policy, State aid, aid for restructuring, bank, control of State aid, economic recession, financial stability, restriction on competition

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   EUROPEAN COMMISSION  Brussels, 4.3.2026  SWD(2026) 86 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE EVALUATION  of State aid rules for banks in difficulty {SWD(2026) 85 final}  
 
 
The Staff Working Document summarises the results of the evaluation of the State aid rules 
for banks in difficulty, launched in March 2022. 

The purpose of the evaluation has been to analyse how State aid rules for banks in difficulty 
have functioned over time and to what extent they have preserved financial stability in the EU 
single market, while ensuring a level playing field by mitigating competition distortions. The 
evaluation findings will inform the Commission on the need or not to revise these rules. 

State aid control in the banking sector in evolving market and regulatory circumstances 

State  aid  control  is  part  of  the  Union  rules  on  competition  laid  down  in  the  Treaty  on  the 
Functioning of the European Union. The general objective of State aid control is to safeguard 
the internal market and fair competition contributing to economic development and growth in 
the Union. In line with this general objective, the specific objectives of State aid rules for the 
banking  sector  have  been  to  preserve  financial  stability  while  minimising  competition 
distortions in the sector. 

Until  2008,  the  Commission  assessed  State  aid  to  banks  in  difficulty  under  the  general 
Guidelines on State aid for rescuing and restructuring firms in difficulty. The outbreak of the 
financial  crisis  in  2008 led to  significant  difficulties for  a large number of European banks. 
The exceptional systemic nature of the crisis threatened the sector as a whole. The State aid 
rules  applicable  to  non-financial  firms  were  no  longer  tailored  to  address  the  needs  of  the 
banking sector. As a result, the Commission developed a dedicated set of rules for assessing 
State  aid  to  banks  in  difficulty.  Since  2008,  the  Commission  has  revised,  updated  and 
expanded these State aid rules several times, to take into account the evolution of the financial 
crisis, the changes in the regulatory framework, and lessons learned from applying the rules. 

These rules are currently laid down in six Commission Communications, of which the most 
recent  and comprehensive was the 2013 Banking Communication. The Communications set 
out the principles applied by the Commission in assessing State aid to banks in difficulty: (i) 
minimising  competition  distortions  due  to  the  granting  of  State  aid;  (ii)  restoring  the  long-
term viability of the supported banks through restructuring (or if this is not possible, ensuring 
they exit the market in an orderly fashion);  and (iii) ensuring that shareholders and selected 
creditors  of  a  supported  bank  bear  part  of  the  losses  (“burden  sharing”),  to  minimise  the 
amount of State aid,  thereby protecting taxpayers and discouraging  excessive risk-taking by 
banks, their shareholders and creditors. 

Since these State aid rules were last revised in 2013, the regulatory environment in which EU 
banks  operate  has  changed  significantly.  The  EU’s  micro-prudential  framework  has  been 
strengthened.  New  EU  rules  were  put  in  place  to  manage  bank  crises,  preserve  financial 
stability  and  protect  depositors,  the  so-called  Crisis  Management  and  Deposit  Insurance 
Framework (‘CMDI framework’). Two pillars of the Banking Union (for euro area countries 
and  those  non-euro  area  Member  States  opting-in)  were  established:  the  institutional 
mechanisms  for centralised supervision  and resolution  of banks. This new regulatory set-up 
leads  to  interactions  between  the  exercise  of  State  aid  control  and  the  actions  of  bank 
supervisory and resolution authorities. 

From  2008  to  2022,  the  State  aid  for  banks  in  difficulty  approved  by  the  Commission 
amounted  to  EUR  6  811  billion,  of  which  EUR  2  904  billion,  namely  42.6%,  was  actually 
granted  by  Member  States  to  banks.  The  remaining  aid  was  authorised  by  the  European 
Commission but never used by the Member States.  The majority (78%) of the approved aid 
was  for  liquidity  purposes,  in  the  form  of  commitments  by  the  State  mostly  to  guarantee 
banks’ liabilities, while the remaining (22%) aid was committed for capital purposes, in the 
form  of  direct  equity  injections  or  impaired  asset  relief  measures,  transferring  the  risk  from 

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impaired assets (e.g. loans) to the State. In terms of used aid, liquidity and capital instruments 
each comprise about half of the aid. 

The highest amounts of State aid were approved at the outset of the financial crisis, in 2008, 
(EUR  3  457.5  billion),  representing  26.4%  of  EU  GDP  and  half  of  the  total  amount  of 
authorised  aid  over  the  period  under  review.  In  terms  of  overall  used  amounts  of  aid  by 
Member States, the highest levels were reached in 2009 and 2010 (EUR 1 042 billion per year 
or 8% of EU GDP). 

Over  the  period  under  review,  the  Commission  adopted  730  decisions  relating  to  aid  to  the 
banking  sector, either in the form  of schemes (which identify aid  beneficiaries in  a general, 
abstract  manner)  or  individual  decisions  to  concrete  banks.  Individual  aid  decisions 
represented  55%  (or  403)  of  the  overall  decisions.  444  banks  received  State  aid  under  aid 
scheme,  while  122  credit  institutions  received  individual  State  aid.  Out  of  the  444  scheme-
aided banks, 90% used liquidity aid only. Of the individually aided banks, 85% used capital 
support, with a large part receiving liquidity aid on top of the capital support (57%). The use 
of liquidity aid without capital support was more limited (15%). 93 individually aided banks 
received  restructuring  aid  helping  them  to  restore  their  long-term  viability  and  thus  support 
them in preserving their economic activity. 22 individually aided banks received liquidation 
aid to support their orderly market exit when long-term viability cannot be restored. 

From  a  case  practice  standpoint,  the  Commission  considered  liquidity  measures  as  the  least 
distortive instruments for competition, due to their temporary nature and insofar as liquidity 
support  was  generally  authorised  for  banks  that  were  fundamentally  sound.  For  this  reason, 
only limited measures to mitigate competition distortions were required and there was no need 
to  submit  a  restructuring  plan  ex  ante  or  to  implement  burden  sharing.  In  contrast, 
restructuring  aid  was  generally  considered  to  be  the  most  distortive  type  of  aid.  The 
Commission  therefore  demanded  dedicated  measures  to  mitigate  the  severe  competition 
distortions  stemming  from  the  aid  and  to  protect  non-aided  competitors.  Market  exit 
supported by liquidation aid was often realised through the sale of parts of the liquidated bank 
to, and integration into, a competitor as an alternative to a wind-down. 

The structure, scope and sources of the evaluation 

The evaluation analyses the effectiveness, efficiency, coherence, relevance, and EU-added 
value of the State aid rules for banks in difficulty. In this context, the evaluation also assesses 
to  what  extent  the  current  rules  are  still  fit  for  purpose,  and  whether  there  is  potential  to 
simplify them or to improve coherence with the CMDI framework.  

In  terms  of  scope,  the  evaluation  covers  the  period  from  2008  up  until  the  present  and  27 
Member States and the United Kingdom.  

The  sources  included  a  public  consultation,  a  targeted  consultation  (first  half  of  2022), 
bilateral  meetings  with  Union  and  Member  States  authorities  (throughout  2023),  an  expert 
study  prepared  by  an  external  contractor  E.CA  Economics  (“Study”,  finalised  in  December 
2023) and internal analyses by the Commission. The Study carried out a comprehensive data 
collection. Proprietary economic and financial data from multiple sources covering European 
banks  in  the  timeframe  covered  by  this  evaluation  were  combined  with  information  on  aid 
amounts,  State  aid  register  details,  Commission  decisions,  and  data  on  the  administrative 
aspects of State aid procedures. Additional macroeconomic information from Member States 
and the EU complemented the dataset. Applying the statistical method of regression analysis, 
the  Study  compared  banks  that  received  aid  with  similar  (to  the  extent  possible)  non-aided 
banks. It also investigated how aid impacted the banking sector of a Member State as a whole. 

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Results of the evaluation 

Overall, the evaluation concludes that the State aid rules for banks in difficulty have largely 
met  their  twin  objective  of  preserving  financial  stability  while  mitigating  competition 
distortions, and hence were largely effective as a State aid framework.   

The evaluation first assesses the effectiveness of the applicable rules and the extent to which 
they (i) contributed to preserving the financial stability; (ii) ensured the effective restructuring 
of  viable  banks  and  orderly  market  exit  of  unviable  banks;  (iii)  were  able  to  mitigate 
competition  distortions  caused  by  the  granting  of  aid;  and  (iv)  helped  discourage  excessive 
risk taking (moral hazard), through burden sharing measures.  

In  terms  of  the  impact  of  the  application  of  the  State  aid  rules  on  financial  stability,  the 
evaluation  presents  a  plausible  interpretation  of  the  long-term  role  of  State  aid  based  on 
available evidence, while recognizing limitations of a statistical assessment. State aid played a 
crucial role in restoring market confidence in the period of the most acute stress (the period of 
global  financial  crisis  and  the  sovereign  debt  crisis  2007-2013),  alongside  monetary  policy 
and external support to  countries for which the threat to  financial stability was more deeply 
rooted in their economy. The role of State aid became more subdued but still relevant in the 
following years when financial stress gradually abated and major policy initiatives were put in 
place  with  notably  the  adoption  of  enhanced  bank  regulatory  requirements,  reflecting  the 
Basel III principles, and the set-up of single bank supervisory and resolution frameworks. 

Having  in  mind  these  elements  of  context,  the  evidence  collected  in  the  course  of  the 
evaluation suggests that State aid – as shaped by State aid rules – has positively contributed to 
financial stability.  

The evaluation shows overall positive, albeit limited, effects of State aid on the improvement 
of  credit  institutions’  lending  capabilities  to  non-financial  corporates  in  the  period  of  crisis. 
However,  some  discrepancies  in  access  to  credit  existed  depending  on  the  size  of  the 
companies. In fact, small and medium size enterprises (SMEs) faced tougher credit conditions 
than larger companies, also due to their intrinsic higher riskiness and their strong reliance on 
bank financing as opposed to alternative financing mechanisms. 

These  results  are  consistent  with  past  scientific  studies,  which  found  that  State  aid  has 
contributed to improve financial stability, which in turn, has resulted in improvements in real 
economy outcomes. Likewise, in the public and targeted consultations, most respondents also 
agreed  with  the  statement  that  the  State  aid  rules  for  banks  in  difficulty  were  successful  in 
achieving the objective of contributing to the preservation of financial stability. 

As far as the impact of the application of the State aid rules on restoring viability of banks is 
concerned, the evaluation assesses whether the rules have been effective in ensuring that aid 
was  properly  channelled  based  on  the  ex  ante  assessment  of  the  viability  prospects  of  the 
beneficiary  bank,  and  –  in  particular  –  whether  restructuring  aid  was  granted  to  banks  that 
managed, through the implementation of their restructuring plan, to return to viability. 

The Study  found that the levels  of broadly  all the tested  relevant  indicators recorded by the 
aided banks converged, after aid was received, towards the levels recorded by the non-aided 
banks.  This  convergence was  typically achieved  within the timeframe of five years targeted 
by the Commission, with some exceptions, such as for the non-performing loans’ ratio. 

The  Study  also  found  that  banks  that  have  benefitted  from  restructuring  aid  exhibit  similar 
exit rates  as  banks  that  did  not  receive  any aid,  over the aggregate period under evaluation. 
Therefore, it is reasonable to conclude that restructuring aid did not distort the typical market 
survival  dynamics.  Finally,  the  Study  concluded  that  it  is  not  possible  to  find  a  set  of 

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statistically  significant  indicators  and  related  thresholds  easily  applicable  to  clearly 
distinguish, ex ante and with sufficient confidence, banks that could reasonably be expected to 
restore their viability and those that could not. 

Considering  all  available  evidence,  including  the  results  of  the  public  and  targeted 
consultations, the evaluation thus concludes that the State aid rules were overall effective in 
supporting  the  restoration  of  viability  of  the  banks  that  received  restructuring  aid  and  the 
market  exit  of  other  banks.  The  rules  have  functioned  properly  to  maintain  in  the  market 
banks that are viable, thereby contributing to the preservation of financial stability.  

As  far  as  the  impact  of  the  application  of  the  State  aid  rules  for  banks  in  difficulty  on 
mitigating  competition  distortions  is  concerned,  the  Study  assessed  the  effect  of  aid  on 
competition  through  proxies  of  banks’  market  power  (raw  markup,  Lerner  index),  cost 
structures (marginal cost) and other measures of the level of competition (net interest margin, 
market shares). 

As  regards  banks  that  received  State  aid  on  the  basis  of  a  scheme,  according  to  the  Study, 
there  was  no  evidence  that  the  aid  granted  under  aid  schemes  caused  a  significant  market 
distortion. The Study also found that banks which had received aid under individual State aid 
decisions  were  not  in  a  position  to  significantly  distort  competition  through  an  increased 
market power or an approved competitive position of the aided banks.  

The evaluation concludes that these findings suggest that State aid conditionality typical for 
cases of individual aid has likely played a role in mitigating competition distortions. 

These  findings  were  largely  consistent  with  existing  scientific  literature.  The  results  of  the 
public and targeted consultations were more diverse, with some respondents having claimed 
that the rules have (rather) not been successful in minimising competition distortions between 
aided and non-aided banks. 

Notwithstanding  these  different  views,  the  prevailing  evidence  gathered  in  the  evaluation 
points towards the conclusion that the State aid granted in accordance with the State aid rules 
under review did not have any significant distortive effect on competition among banks. 

Finally, as far as the impact of the application of the State aid rules for banks in difficulty on 
discouraging  moral  hazard  through  burden  sharing  is  concerned,  the  Study  showed  that 
implicit subsidies  (advantage due to  a perceived  higher probability of receiving State aid  in 
case  of  need)  observed  for  the  largest  European  banks  decreased  when  the  2013  Banking 
Communication entered into force, and  even further after the CMDI framework entered into 
force. This indicates that market discipline on the part of banks perceived as too-big-to -fail 
also increased, both in terms of deposit pricing and overall liability pricing. The change of the 
rules also led to a change in the methodologies of rating agencies resulting in stricter rules for 
banks’ ratings.  

Also  the  replies  to  the  public  consultation  and  the  targeted  consultation  broadly  considered 
that the different burden  sharing measures, applied since the 2008 Banking Communication 
and reinforced with the entry into force of the 2013 Banking Communication, namely with the 
burden  sharing  measures  to  shareholders  and  subordinated  creditors,  have  been  broadly 
effective in reinforcing market discipline and containing moral hazard. 

When  assessing  the  efficiency  of  the  rules  under  review,  the  overall  body  of  evidence 
suggests that they have allowed to reasonably limit the administrative burden related to State 
aid control. There still seems to be room for improvement, for clarifying certain concepts and 
the  interaction  with  the  CMDI  framework  and  for  a  consolidation  of  the  rules,  which  are 
currently  set  out  in  six  separate  communications,  in  one  single  communication.  The  overall 

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body  of  evidence  further  suggests  that  the  rules  under  review  allowed  for  an  efficient  State 
expenditure  and  that,  most  likely,  the  benefits  of  these  rules  outweighed  the  costs  linked  to 
their implementation. 

As regards the  coherence of the rules under  review, the evaluation  shows that the rules are 
coherent among themselves and operate well together to achieve their objectives. As regards 
external coherence, however, there is a need for stronger coherence between the rules under 
evaluation  and  other  EU  policies  and  legislation  and  in  particular  the  CMDI  framework.  It 
appears  that  the  rules  do  not  reflect  more  recent  developments,  which  occurred  after  their 
adoption. 

Finally, the evaluation confirms that the State aid rules for banks in difficulty provided a clear 
EU added value compared to a situation without such rules. 

In conclusion, the State aid rules for banks in difficulty have been broadly  fit for purpose. 
The rules seem  to  have  been  largely  effective in  reaching  their twin  objective of preserving 
financial  stability  while  mitigating  distortions  to  competition.  However,  they  need  to  be 
updated  to  reflect  the  latest  legislative  developments  and  market  developments.  The 
evaluation  also  indicated  room  for  further  clarification  of  the  rules,  as  well  as  further 
streamlining and consolidation of the rules.  

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