EC to probe move under state aid rules

THE nationalisation of Anglo Irish Bank is being examined by the European Commission to ensure it complies with state aid rules.

Finance Minister Brian Lenihan contacted Competition Commissioner Neelie Kroes on Thursday before publicly announcing the bank’s nationalisation.

A spokesperson for Ms Kroes said the commission is completely neutral on the nationalisation itself.

“The commission is in the process of assessing whether or not there may be elements of state aid in the terms and conditions of the nationalising transaction on the basis of the information submitted by the Irish authorities,” she said.

The issues the commission will consider are whether the Government paid over the odds for the assets and if so, whether it could be considered illegal.

Meanwhile, ISME, the Irish Small and Medium Enterprises Association, has castigated the banks for dramatically increasing their interest margins at the expense of small businesses despite falling interest rates.

ISME claims Irish banks have consistently charged excessive interest over and above the interbank rates.

These margins have increased by between 45% and 114% in the last 12 months, during a period of significant reductions in ECB rates and the introduction of a Government guarantee scheme.

“The association has previously highlighted numerous examples of overcharging and gouging by the banks of their small businesses customers and these figures confirm that the practice is still very much evident,” said ISME chief executive, Mark Fielding.

“The banks need to be reminded that it is the Irish taxpayers, including small business owners, who bailed them out of their self-inflicted crisis,” he added.