COMMISSION REQUIREMENTS:EUROPEAN COMPETITION commissioner Joaquin Almunia said the Government's statement on the banks "brings clarity" but made it clear that several hurdles remain to be cleared before the EU executive hands down its approval for the transactions.
Mr Almunia said he will proceed quickly with a decision on the wind-down of Anglo Irish Bank once he receives final details from the Government on its cost estimate for the bank’s rescue.
He also said he will have to closely consider the Government’s application to provide fresh State aid to Allied Irish Banks (AIB) and continues to examine the Government’s support for Irish Nationwide Building Society (INBS) and the Educational Building Society (EBS).
Mr Almunia has indicated he is positively disposed to the Anglo plan but he is known to have questioned whether Anglo’s “funding bank”, which will operate alongside the “asset recovery bank”, should be allowed to take new deposits from customers.
He welcomed the fact Anglo’s secondary bondholders will have to make to make a “significant contribution” to the cost of the bank’s resolution. “This is in line with the commission’s principles on burden sharing since it both addresses moral hazard and limits the amount of aid, with benefits to the taxpayers,” he said.
“From a competition point of view, it is clear that the foreseen restructuring and resolution of the bank addresses competition distortions created by the large amounts of aid at stake.”
The commissioner also welcomed new measures to deal with the transfer of assets from Anglo and other institutions to the National Asset Management Agency (Nama).
These include the transfer of Anglo’s remaining eligible assets to Nama by the end of October and an increase to €20 million from €5 million in the threshold above which the relevant AIB and Bank of Ireland loans transfer to the State’s “bad bank”.
“The announced changes to the way it manages loans are in line with the commission’s approval of the Nama scheme,” Mr Almunia said. He said the new public capital for AIB, which will be majority-owned by the State after the recapitalisation, will have to be notified to the commission for approval.
“I will of course follow this process very closely,” he said.
“For INBS, the commission will await the notification of the additional capital as well as the details on the institution’s future, and will assess them thoroughly and swiftly. For EBS, the commission is in the process of finalising its initial assessment of the restructuring plan submitted at the end of May 2010.”
