EU State Aid Rules for Banks in Difficulty - Call for Evidence on Revision

JD Supra Finance & Banking

Published April 1st, 2026

Detected April 2nd, 2026

Summary

The European Commission has launched a call for evidence on revising EU state aid rules for banks in difficulty. The initiative proposes to consolidate six existing crisis-era communications into a single, clearer framework aligned with the EU Crisis Management and Deposit Insurance (CMDI) framework. Feedback deadline is 14 April 2026, with final adoption planned for Q2 2027.

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What changed

The European Commission is seeking evidence on revising the EU state aid rules for banks in difficulty, which were last updated in 2013. The revision aims to consolidate six existing crisis-era communications into one framework to address misalignment with current regulatory developments, particularly the 2025 CMDI reform. Key objectives include improving coherence between state aid and resolution frameworks, reducing duplication, and ensuring public support is primarily channeled through resolution procedures with national state aid becoming the exception.

The deadline for submitting feedback is 14 April 2026. Banks, particularly smaller and medium-sized institutions, should review the consultation and submit comments on how the revised framework may affect their resolution planning and compliance obligations. The final rules are expected to apply from Q2 2028.

What to do next

Submit feedback to the EC call for evidence by 14 April 2026
Review how the revised framework may affect resolution planning and state aid procedures
Monitor CMDI implementation developments and their interaction with state aid rules

Source document (simplified)

April 1, 2026

EC call for evidence on the revision of the state aid rules for banks in difficulty

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The European Commission (EC) has launched a call for evidence on revising the EU state aid rules for banks in difficulty. The initiative proposes to consolidate the six existing crisis-era communications into a single, clearer framework to take account of regulatory and economic developments, particularly arising from the recent reform of the EU's Crisis Management and Deposit Insurance (CMDI) framework. Political agreement on that reform was reached in June 2025, with the changes focusing on smaller and medium-sized banks, expected to apply from Q2 2028.

The EC notes that the current state aid rules, last updated in 2013, no longer fully reflect the post crisis regulatory environment, including the introduction of the Bank Recovery and Resolution Directive and the Single Resolution Mechanism. Neither does it reflect the CMDI's policy preference for addressing bank failures through harmonised EU resolution tools that prioritise shareholders', creditors' and industry-funded loss absorption over taxpayer funding, unless in exceptional circumstances. Misalignment between the two frameworks risks inconsistent outcomes, regulatory arbitrage and increased administrative burden, particularly where overlapping requirements pursue the same objectives. The revision therefore aims to improve coherence with CMDI, reduce duplication and ensure that public support for bank failures is, where justified, channelled primarily through resolution procedures, with national solutions involving state aid becoming the exception.

The EC also clarifies that additional state aid requirements may still apply where the CMDI framework pursues different objectives (for example, addressing competition distortions), but duplication of principles already covered by CMDI would be removed.

The deadline for feedback is 14 April and adoption is planned for Q2 2027.

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