EU approves Irish guarantee scheme

11:12, November 21, 2009      

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The European Commission (EC) has approved an Irish measure to stabilize financial markets by providing guarantees on deposits and debt to eligible banks active in the Irish market.

The decision was taken here Friday under EC Treaty state aid rules.

After analysis of the Irish case, the EC concluded that its revised scheme was in line with its Guidance Communication on state aid to overcome the financial crisis.

Moreover, as the amended measure, originally approved on 13 October 2008, was limited in time and scope, the EU's executive branch concluded it was adequate to remedy a serious disturbance of the Irish economy, the EC said.

"The new guarantee scheme will give credit institutions in Ireland access to medium-term, state-guaranteed financing and provide Ireland with an effective means of restoring confidence in the financial markets, while at the same time limiting distortions of competition," said Competition Commissioner Neelie Kroes.

The revised guarantee scheme includes substantial modifications, such as a change of material scope of the scheme. The instruments guaranteed under the scheme may be issued from Dec. 1, 2009 until Jun. 1, 2010.

There is an exclusion of subordinated debt and an extension to instruments with a maturity of up to five years. Finally, the new scheme aligns the guarantee fee to the remuneration structure set out in the Commission Guidance Communication.

Source: Xinhua
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