EUROPEAN UNION governments rescuing banks should avoid privileging national lenders, the European competition watchdog said yesterday, promising swift approvals of eligible schemes.
Presenting guidelines on measures to aid banks in crisis, the European Commission also said any aid should be limited in scope and time, shareholders must not reap unfair benefits, and the private sector should contribute to the programmes.
"EU state aid rules require that measures taken do not give rise to disproportionate distortions of competition, for example by discriminating against financial institutions based in other member states," the EU's executive arm said in a statement.
Competition would also be distorted if a rescue plan allowed "beneficiary banks to unfairly attract new additional business solely as a result of the government support", it said.
The commission, which monitors whether national decisions are compatible with EU laws on state aid and competition, said it aims to clear compliant schemes in 24 hours where possible.
"By adopting this guidance the commission has delivered very quickly on its undertaking . . . to help member states to act in a co-ordinated and effective manner to address urgent problems facing the financial sector," EU competition commissioner Neelie Kroes said.
The EU executive welcomed Ireland's amended bank guarantee programme on Sunday after it was revised to include foreign-owned banks with significant operations in the country.
- (Reuters)
