EU approves French, Dutch financial rescue plans
EU Competition Commissioner Neelie Kroes says the Dutch and French plans to support the financial sector do not disrupt competition.31 October 2008
BRUSSELS - The European Commission on Thursday cleared French and Dutch plans to protect their lenders from the global credit crunch.
Both were judged to be in line with EU rules on state aid and with guidelines published by the European Union's executive arm on 13 October.
These state that any rescue package must be limited in time and scope and must not discriminate against foreign-based banks operating in the country.
State guarantees must cover only new debts, beneficiaries must pay a fee derived from market prices, while state money cannot be used by banks or insurance companies to attract new business.
France is to provide liquidity to troubled banks through a special 265-billion-euro fund guaranteed by the state.
Officials said they planned to approve the second part of France's financial rescue package, on recapitalisation, once they receive a formal notification from Paris.
The Dutch scheme involves guarantees worth EUR 200 billion to help restore confidence in what the commission describes as "fundamentally sound and viable" financial institutions.
"The Dutch guarantee scheme is an efficient tool to preserve the access of financial institutions to the short and medium term financing they need, but at the same time is ring-fenced against abuses," said EU Competition Commissioner Neelie Kroes.
The commission has so far approved similar financial rescue packages from Germany, Britain, Ireland, Denmark, Portugal and Sweden.
Its officials plan to approve Italian and Spanish plans next week, but they are still waiting for "binding commitments" and more detailed information from Belgium, a spokesman for Kroes said Friday.
Belgian banks have been among the hardest-hit by the credit crunch, with Fortis, Dexia and KBC all requiring some form of help from the state.
[dpa / Expatica]