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Eversheds comment: Green light for EU bail ins provides much-needed clarity on state aid

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    Commenting on news that the European Union’s top court has backed EU guidelines designed to prevent taxpayers from footing the bill for bailing out stricken lenders, Totis Kotsonis, partner and state aid expert at Eversheds, says:

    "This was a challenge to the European Commission's state aid guidelines which among other things, essentially sanction the idea that a so-called "bail-in" is compatible with EU law. Although not legally binding, and this was confirmed by the European Court in this case, such guidelines are vital as they set out the manner in which the European Commission will assess the compatibility of state aid with EU law.

    “It is important to note that under EU law the commission is the sole arbiter of the compatibility of state aid with EU law requirements. The idea of a bail-in has been controversial ever since it was used for the first time three years ago in the context of Cyprus's banking crisis. The Court's judgment now confirms that such a mechanism is compatible with EU law requirements, providing much-needed comfort and clarity to member states."


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