European green light for four countries' bank aid measures

European green light for four countries' bank aid measures

The European Commission said on June 30 2010 that it had extended its authorisation under EU state aid rules until  December 31 2010 of the Dutch and Slovenian bank guarantee schemes and the Greek and Polish bank support measures.

The extended schemes require the banks to pay higher premiums for the guarantees granted by the state.

This is to encourage banks to finance themselves without state support and to limit distortions of competition.The vast majority of the bank support schemes put in place in 2008 and 2009 to ensure financial stability expire in June, the EC said in a statement.

In agreement with EU finance ministers, the extension of guarantee schemes is subject to higher fees paid to the government and, for banks that continue to rely heavily on those guarantees, to a viability review.The European Commission has already extended under these conditions its authorisation of bank guarantee schemes in Sweden, Germany, Austria, Latvia, Ireland, Spain and Denmark. The extensions are for six months, until the end of 2010.

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