A similar role may be played by securitisation schemes.16 The EU legal framework does not close the door to setting up an AMC with government sponsorship. The rules also allow for precautionary recapitalisation of banks by the public sector in cases of significant financial stability concerns, subject to strict conditions laid down in the BRRD (Art.
32, 4), covering hypothetical losses estimated under an adverse scenario of a stress test. Precautionary recapitalisations also have to respect State Aid rules that generally require bail-in of subordinated debt as stated in the European Commission’s communication of July 2013, where possible exemptions are nevertheless foreseen (paragraph 45).