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EC extends crisis rules for banks
Thursday 1 December 2011 - by Nicola.York@gfnews.com
The European Commission has revised and extended state aid rules providing support to banks, in light of the continuing sovereign debt crisis in the eurozone.
Commisioner vice-president for competition Joaquin Almunia says that banks in the EU have come under "renewed pressure" from tensions in the sovereign debt market, and that this justifies the extension of temporary state aid rules.
The rules have also been updated with more detail given as to how to ensure member states are adequately remunerated if they decide to recapitalise their banks using instruments, such as ordinary shares, where the remuneration is not fixed in advance.
Speaking at a press conference on Thursday, commissioner Almunia said: "My intention is to disconnect these life support machines to the banks at the very moment we can declare the financial conditions in the market to be normal. I do not want to prolong it one day more than is needed."
The commissioner also said he is happy with "the vast majority" of banks that are receiving state aid support because they have met or are meeting the conditions of that support, through restructuring programmes and putting in place compensation for the distortions of competition. However, there are a few banks that the European Commission is still investigating or is not happy with, according to Almunia.
The measures were due to end in December 2011. The new measures will be adopted from 1 January 2012.
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