LENDERS MUST draw up restructuring plans from next year in return for government capital injections or asset transfers to so- called bad banks under European Union measures announced yesterday.

Every bank in the EU “having recourse to state support in the form of capital or impaired asset measures will have to submit a restructuring plan”, the European Commission said. Until now “this was limited to distressed banks”.

Joaquín Almunia, the EU’s competition commissioner, said yesterday the measure was part of a plan to phase out crisis-aid rules for banks “to prepare a gradual return” to normal market functioning.

“The remaining risk of renewed stress is a valid reason to proceed with care and caution,” he said.

Banks in the 27-nation EU used about €1.1 trillion of state loans or guarantees last year, the commission said.

The EU’s anti-trust agency, which checks whether subsidies distort competition in the region, granted approval for the measures as part of its response to the biggest financial crisis since the Great Depression.

EU policymakers are trying to wean banks off government help to avoid harming competition. Mr Almunia extended the crisis rules into 2011 and told European lawmakers yesterday that “market conditions permitting, we should return to the normal state-aid regime on January 1st, 2012”.

The commission has already sought divestments to compensate for the state help banks received.

Mr Almunia must approve the restructuring of Anglo Irish Bank and AIB. The commissioner indicated he could not insist on general burden sharing for bondholders in bailouts. In response to a question, he said he was unable to “establish a general rule for burden-sharing” of bondholders.

Each decision had to be case-by-case depending on the bank, he told reporters in Brussels. – (Bloomberg)