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Sahar Shamsi, Pantelis Solomon and Nicole Robins

In response to the financial and economic crisis, the European banking system received a significant amount of State funds, and allowed a wide range of rescue and restructuring measures to ensure financial stability. As State aid rules in the banking sector evolved to reflect the nature of the crisis, the policy towards compensatory measures, which are designed to limit any distortions to competition created as a result of the aid, has changed over time. This chapter considers the wide range of compensatory measures that have been introduced, how the approach to compensatory measures has changed over time and whether the measures have met their stated intentions.