EU extends bank guarantee schemes in Ireland, Spain

1st June 2011, Comments 0 comments

European Union competition authorities said Wednesday they will give Ireland and Spain another six months' leeway in the battle to shore up their debt-laden banking systems.

"The European Commission has authorised, under EU state aid rules, a six month prolongation of guarantee schemes for credit institutions in Ireland and Spain, until 31 December 2011," a statement said.

The commission said the guarantee schemes "represent an appropriate means of remedying a serious disturbance in the Irish and Spanish economies and as a such, are compatible" with EU laws.

Almost half of the guarantee schemes in place at the end of last year, which could be traced back to the height of the financial crisis and the collapse of major lenders including Royal Bank of Scotland, have been phased out.

Likewise, the sums involved have shrunk -- other than in Ireland, where massive bank downsizing and restructuring is under way as part of a 85-billion-euro Eu-IMF bailout package of which some one third is set aside for the banking sector.

© 2011 AFP

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