The Competition Council has submitted the relevant regulations on state aid to financial sector entities for discussion with a view to their approval by the government.
The draft document provides for the recapitalization procedure, including the definition of categories of financial assets subject to state aid. If now, according to the law, the state is deprived of such an opportunity, after the legislation is amended, it will have such powers.
The financial crisis is not the only reason when the state will be given the opportunity to intervene and determine who and how to save first.
As an innovation, it is proposed to come to the aid and “in case of sale of a financial sector entity in the course of an orderly liquidation procedure”. “Liquidation” assistance in the context of the “billion theft” looks a bit of a sham. But for the future, the antimonopoly authority has developed a whole procedure of conditions under which a financial sector entity will be able to qualify for state aid – restructuring plan, etc. – with an important reference to the extraction of funds (in case of emergency measures) from the reserves of the National Bank.
Support for financial sector entities is among the most competition-distorting types of state aid. The Competition Council found it necessary to explain its departure from its previous beliefs regarding banks that were not supposed to be assisted. This is because, unlike others, by helping financial sector entities in unforeseen or exceptional circumstances, the government assumes rather large risks.
To mitigate them, the antimonopoly authority promises to approve such support only if it is necessary “for the economic growth of the country”. Otherwise, the provision of such state aid will be considered a “waste of state resources” and will be prohibited.
At the same time, the state will be less interested in the demise of real sector entities. The new document provides for the abolition of the Regulation on state aid intended to eliminate serious irregularities in the economy. Interventions from the state budget as an instrument of state policy here, as before, will largely determine who will live and who will die.
