The European Commission has finally published a memo on its role concerning the recapitalisation of the Spanish banks and its oversight from a State aid perspective, only one day after the CJEU declared in case C-370/12 the EU legality of the creation of the European Stability Mechanism (ESM) that is now taking over from the European Financial Stability Fund (EFSF).
Of all the information published by the Commission in its memo, I think there is a particular piece that deserves careful scrutiny (and would most likely have required more detail from the Commission). In point 8 of the memo, the Commission offers the following question and answer:
How does the Commission ensure that Member States implement plans to restructure banks that have received state aid?Member States give the Commission a legal commitment to abide by the restructuring plans which the Commission approves. The Commission has a monitoring system, including periodic reports and possibly a trustee in more complex cases, to ensure that the restructuring plans and commitments are duly implemented. There will be a trustee for BFA/Bankia, NGC Banco and Catalunya Banc [which are the three nationalised banks that are still under State control, after Banco de Valencia was sold to CaixaBank only yesterday].
I think that monitoring such a complex aid scheme will take up a significant part of the European Commission's resources and that its role and functions will be borderline with the supervision competences of the Spanish Central Bank and the Eurosystem authorities. In my opinion, this special supervision scheme designed by the Commission to address the situation of the Spanish banks may have spillover effects on the creation of a single EU bank regulator.
In that regard, and while political negotiations try to overcome the UK's opposition to such development, it may be worth to wait and see how effective the European Commission can be in the supervision of the three most troubled Spanish banks (and, particularly BFA/Bankia, currently immersed in deep legal battles including a major criminal investigation against all former directors and members of executive boards). Surely, this 'pilot' experience will offer lessons and best practices that may contribute to a better design of the future (?) EU banking macroregulator.