{ "docId": "019dd923-5ca1-7489-b636-5bdb4b29bc2d", "docSlug": "cb70fa2fdc72b67f", "documentTitle": "Deleveraging Europe", "authorId": "Deloitte", "authorName": "Deloitte", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "square", "aspectRatio": 1, "pageNumber": 22, "pageCount": 61, "prevPage": 21, "nextPage": 23, "slideType": "appendix_disclosure", "function": "summarize", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide contains technical regulatory definitions regarding 'Real Economic Value' (REV) and 'Current Market Value' (CMV) in the context of EU state aid rules.", "elementsJson": [ "paragraph", "callout_box", "photo" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-5ca1-7489-b636-5bdb4b29bc2d/22", "deckHref": "/decks/019dd923-5ca1-7489-b636-5bdb4b29bc2d", "deckJsonHref": "/decks/019dd923-5ca1-7489-b636-5bdb4b29bc2d.json", "deckAnchorHref": "/decks/019dd923-5ca1-7489-b636-5bdb4b29bc2d#slide-22", "components": [ { "bbox": { "h": 0.12, "w": 0.45, "x": 0.03, "y": 0.35 }, "kind": "callout", "text": "State aid does not arise if the transfer price of the assets is equal or lower than the market value at the time of the transfer. However, if the transfer price exceeds the market price then the impaired asset measure involves state aid", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b34e7eca-a4fe-4708-88a1-322c0aa46adf", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "State aid does not arise if the transfer price of the assets is equal or lower than the market value at the time of the transfer.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd951-c239-70c0-95fa-35a0f7722361", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.94, "w": 0.46, "x": 0.51, "y": 0.03 }, "kind": "image", "text": null, "attrs": null, "subkind": "photo", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4d8fba6b-2ac6-4856-b385-c1605b7a4851", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.28, "w": 0.45, "x": 0.03, "y": 0.61 }, "kind": "paragraph", "text": "The EU's state aid rules are set out in the EC's Impaired Asset Communication (IAC) and include: full ex-ante transparency and disclosure of impairments and an upfront viability assessment of eligible banks; a 'correct and consistent approach' to the valuation of assets. An independent valuer may be appointed; and there should be suitable sharing of the costs relating to the transfer of assets between the government and the banks' shareholders and creditors (the haircut applied has to make banks recognise losses, and AMCs will also need to pay a fee at market rates for any state guarantees provided). There should also be an alignment between incentives for distressed banks with public policy objectives; and the timeframe for the bank to participate in asset relief schemes should be limited, to encourage a rapid resolution and to avoid moral hazard. The IAC also includes follow-up provisions for the restoration of banks to viability.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "300bb565-ff75-47fb-b010-feafbad8f187", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.45, "x": 0.03, "y": 0.18 }, "kind": "paragraph", "text": "In essence, REV is based on current market value (CMV) but with adjustments to reflect the extraordinary and temporary non-functioning of the market. Generally speaking, the transfer value (TV) must be at or below REV; the difference between the TV and CMV equals the state aid amount.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3c806d80-64dc-40c0-a551-e3c901ee47b5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.45, "x": 0.03, "y": 0.51 }, "kind": "paragraph", "text": "However, asset relief measures can be declared compatible with state aid rules if the transfer price of the assets is less than REV (or underlying long-term economic value) of the assets. A TV above the REV will be approved only if accompanied by deep-seated restructuring and claw-back provisions for any excess.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "994a23b5-2aee-479f-8171-0239bcbf4660", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.23, "x": 0.25, "y": 0.345 }, "kind": "paragraph", "text": "Regulators and policy makers have sought to get on the front foot of the NPL issue since before the start of the pandemic. The potential benefits of AMCs are highlighted in the European Commission's December 2020 communication, including the proposal for a network of national AMCs which could work together to reduce NPL stocks across the EU. While the timing and scale of increase in NPLs post pandemic is still uncertain, AMC's will continue to play an important role in NPL resolution.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "db397b5f-5f96-4633-a267-2c37385bf35f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.45, "x": 0.03, "y": 0.86 }, "kind": "source-note", "text": "7 Where CMV is deemed to be the price between a willing buyer and willing seller after an adequate period of due diligence to understand what is being acquired but without remediation of any deficiencies in the documentation, collateral available, or the economic environment to which the assets are subject", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a5383f7f-f8e0-419e-8ef9-6a01e6b8886a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.06, "x": 0.25, "y": 0.305 }, "kind": "title", "text": "Conclusion", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "be46cdd6-f250-4918-ab53-06669b2e67a8", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 30, "from": 22, "beatId": "1d368732-2286-482a-a36f-12cdfe1cbe31", "arcName": "The Consultant's Gambit", "arcSlug": "consultants-gambit", "beatName": "Evidence & Proof", "beatSlug": "consultants-gambit-evidence-proof", "evidence": "The report provides data tables, case studies, and completed transactions to support its findings.", "position": 3, "confidence": 0.8, "parentBeatName": "Evidence", "parentBeatSlug": "evidence" } ], "loops": [ { "to": 61, "from": 3, "name": "Tale Two Worlds", "slug": "04-tale-two-worlds", "bestFor": "Competitive analysis, benchmarking, case for change", "matchId": "c08a30e0-a357-432d-8459-5fd63a148514", "evidence": "The report contrasts the current market situation with potential future opportunities.", "position": 0, "objective": "To present a comprehensive overview of the European deleveraging landscape.", "structure": "Current State -> Desired State / Benchmark -> The Gap & Implication", "confidence": 0.7, "description": "Show the gap between two states to drive urgency or highlight opportunity" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }