EU could decide funding bank represents unfair competition

THE European Commission may consider that Government plans for the new Anglo Funding Bank to continue to take deposits could constitute unfair competition for other banks, as it is fully guaranteed by the state.

Finance Minister Brian Lenihan said he hoped the funding bank, to be wholly-owned by the Department of Finance, would be able to continue to take deposits. The new bank would not lend but would hold money that is on deposit with Anglo.

However, sources indicate the European Commission may consider this would be unfair competition for the other banks, since it would be state-owned and fully guaranteed by the taxpayer.