New EU guidelines on state aid for banks

The EU has published new guidelines on state aid to banks, which come into force from the end of next year.

The guidelines are based on three principles: that banks given aid by Governments must be made viable in the long term, that they and their owners must carry a fair burden of the restructuring costs, and that measures must be taken to limit the impact on competition.

Ireland has so far given a total of €11bn to AIB, Bank of Ireland and Anglo Irish Bank, with European Commission approval.

Competition Commissioner Neelie Kroes, who visited Dublin last week, said: "The financial crisis may not be over yet, but we need to start working seriously with member states to restructure European banks.

"We need to make banks viable again without state support and to re-invigorate competition in the single market.

"The guidelines adopted today will be a useful tool for banks and member states by explaining the criteria the Commission will apply to restructuring aid for banks in the current period.

"It complements our previous guidance on state guarantees, recapitalisation and the treatment of impaired assets".