Leadership

EU pledges €3.63tr to banks through state aid

07.12.2009
The EU 27 countries have pledged a massive €3.63tr to banks in the form of state aid and guarantee schemes since the onset of the global financial crisis in 2008 to 11 November 2009, according to new figures from the European Commission released today.

However, the Commission figures showed that while total crisis support made available by member states and approved by the Commission in 2008 was €3361bn, the nominal amount of crisis support actually implemented by member states in 2008 was much lower and stood at €958bn. The state aid element of this amount taken up by banks is estimated at just €212.2bn or 1.7pc of EU-27 GDP.

While much aid has been pledged to lenders during the financial crisis, many have been wary about taking it up due to the conditions attached by the Commission to ensure competitiveness in the market.

The examples of the insurer ING and UK banks RBS and Lloyds Banking Group, which have all been ordered to sell off certain assets in return for state aid, have served to show how the Commission is intent on implementing its policy of preventing market distortion by state aid.

The fate of the Irish banks in receipt of large amounts of state aid - AIB, Anglo Irish Bank and Bank of Ireland - is set to be unveiled in the coming months.

“In the past 14 months, unprecedented rescue measures allowed Europe to stabilise financial markets and help to pave the road to recovery. By vetting this aid quickly, and strictly controlling its use, we have ensured state aid is part of the solution to the crisis,” said EU Competition Commissioner Neelie Kroes (pictured).

“We have now entered the restructuring phase for the banking system with first important decisions already taken – for example on KBC, ING, Lloyds, Fortis and Commerzbank. In 2009, we have also allowed additional aid to the real economy to offset the credit crunch,” she added.