Conceptual and Methodological Remarks

Conceptual and methodological remarks

Scope

The State Aid Scoreboard (crisis aid) shows data on State aid granted to financial institutions within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU). Those data are reported by the EU Member States on the basis of Commission Regulation (EC) 794/2004.

Crisis aid data are reported by aid instrument, that is recapitalisations, impaired asset measures, guarantees on liabilities and liquidity measures, other than guarantees on liabilities. The data include both the maximum amounts of aid that EU Member States were allowed to grant (State aid approved) and the amounts of aid actually implemented (State aid used).

The methodology applied to crisis aid data is slightly different from non-crisis aid, in a sense that it does not necessarily refer to the actual aid element of an aid measure. For instance, in the case of guarantees, crisis aid data show outstanding amounts of guaranteed liabilities in a reporting year rather than the aid element (that is, a difference between the interest actually paid and the interest that would have been paid without a State guarantee).

State aid approved

Those are data on the maximum amounts of aid, included in the measures adopted by the Member States and authorized by the Commission. In other words, those are the maximum amounts of aid (by aid instrument) that Member States were allowed to grant to financial institutions. However, data on State aid approved represent neither the amounts of aid actually used nor the benefit obtained by individual financial institutions.

State aid used

Those are data on the amounts of aid (by aid instrument) actually given to financial institutions. However, those data do not represent the cost for public finances, resulting from State aid granted to financial institutions. For example, data on recapitalisations do not reflect the fact that some of the capital provided to financial institutions during the crisis has already been repaid. Likewise, the outstanding stocks of guarantees on liabilities reflect risks rather than fiscal costs, as those risks only result in costs if guarantees are called.

More specifically, data on recapitalisations show the overall amounts of capital, including liquidation aid, provided in a reporting year. Aid repayments are not taken into account.

The volumes of guarantees on liabilities and liquidity measures, other than guarantees on liabilities, in a reporting year are calculated as the outstanding amounts as of 31 December of that year.

Data on impaired asset measures show the amounts of aid implemented in a reporting year, calculated as the transfer value of assets minus their market value. Unwinding of impaired asset measures is not taken into account.

Statistics on public support to financial institutions provided by other Commission services

Apart from DG Competition, other Commission services also provide data on government support to financial institutions during the crisis. Notably, Eurostat publishes statistics on fiscal impacts of such interventions on government deficit and debt.

The main differences of Eurostat data, compared to the State Aid Scoreboard published by DG Competition, are the following:

Since Eurostat data aim to show the fiscal impact of public support measures, recapitalisations and impaired asset measures might be split into two parts: (1) an expenditure component that is reported in flows and impacts government deficit, and (2) an investment component that has no impact on the deficit and is only reflected as an addition to the stock of financial assets. The State Aid Scoreboard shows a single figure by State aid measure.
Eurostat data on flows include government revenue. Revenue is not currently reported in the State Aid Scoreboard.
Eurostat data on the stock of liabilities include an imputed component. Unless government intervention is financed by means of dedicated liabilities (which are then reported by Eurostat), the necessary financing is imputed from the overall government borrowing.
Eurostat data also show contingent liabilities that have no immediate impact on government debt.

The following two examples can demonstrate in practice the differences between the methodological approaches applied by Eurostat and DG Competition:

1. A Member State might inject capital into a state-owned bank, under conditions that do not constitute State aid. Such a transaction would not be reflected in the State Aid Scoreboard. However, the transaction would qualify as government intervention (with an impact on government debt and, potentially, deficit/surplus) and would be reported in Eurostat statistics.

2. If a similar transaction, as described above, constitutes State aid, the value of that transaction would be included in the State Aid Scoreboard. On the other hand, in Eurostat reporting the value of that transaction might be split into an expenditure component (essentially, the part of the transaction that is written off immediately) and an investment component. The relevant figure in the State Aid Scoreboard will therefore be bigger than either the expenditure or the increase in the stock of financial assets reported by Eurostat.