EU approves 3.5 bln euro capital boost for Belgian bank KBC

19th December 2008, Comments 0 comments

European Commission judged that the measure was in line with EU state aid rules.

BRUSSELS - The European Commission approved on Thursday Belgian government plans to plough 3.5 billion euros (5.1 billion dollars) into bank KBC, judging the measure was in line with EU state aid rules.

The Belgian government decided at the end of October to pump public funds into the bank in order to shore up its capital in the face of the worst financial crisis in generations.

"The capital injection is necessary to maintain the market's confidence in KBC and to ensure its contribution in providing loans to the real economy," EU Competition Commissioner Neelie Kroes said in a statement.

The capital boost made KBC the third Belgian bank to get a state support after both Fortis and Dexia required bailouts as investor and lenders' confidence in them collapsed due to the crisis.

However, both the government and KBC's management insisted at the time that the move was a preventive measure and not an emergency rescue, as in the cases of Fortis and Dexia.


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