Relieving banks from toxic or impaired assets: the EU state aid policy framework

The financial crisis which started in July 2007 has led to major strains in the global banking system. This ‘credit’ crisis became systemic when Lehman Brothers filed for bankruptcy in September 2008, at which point governments and central banks had to intervene on an unprecedented scale to contain the severe impact of the crisis on the real economy. Given the extent of the problems in the banking sector, policy-makers quickly put in place a package of policy measures to accommodate the liquidity and solvency strains on banks. EU Member States dealt with liquidity and solvency problems in the banking sector mainly through four—interrelated—sets of state aid measures in the 2007–2012 period: