Brussels, 07/04/2015 (Agence Europe) - On 7 April, the European Commission announced that it had asked Greece, Portugal, Spain and Italy for information on possible state aid to banks which use a type of own funds which the international regulators regard as being of poor quality, confirming information published by the Financial Times.
“The Commission's sending out letters asking for information from those states which provide guarantees on deferred tax assets (DTA)”, firstly in order to understand how these measures work and, secondly, to determine whether state aid is involved, said Alexander Winterstein, a spokesperson of the European institution. DTAs represents the difference between the accounting result and the tax result of a company and constitute tax amounts which can be recovered in subsequent financial years.
The four states in question accept these DTAs as part of banks' own funds and give them their guarantee. Commission spokesperson Lucia Caudet explained that under the European rules, DTAs will no longer be able to be considered as a bank's own capital by 2019. However, neither the European rules nor the international 'Basel III' agreement on reinforcing the quantity and quality of banks' own funds provide clarification on the treatment of these DTAs from a state aid point of view, and “that's what we're looking into”, she said, adding that it was not, at this stage, a formal Commission investigation. Some of the responses have already been received and the work will take time, Winterstein explained.
The Commission went on to explain that it had asked these countries to provide this information following requests from stakeholders, particularly members of the European Parliament. The Commission will seek to determine whether this regime is selective, in other words reserved for the banking sector, or not. (Elodie Lamer)