EU Commission waiting for details of Irish bank pledge

The European Commission was still waiting today for the Government to submit for approval full details of its bank guarantee plan.

As legislation was going through in Dublin safeguarding all deposits in the country's six largest banks for two years, irritation was growing at EU Commission headquarters at the lack of consultation over EU state-aid rules.

Yesterday, EU Competition Commissioner Neelie Kroes urged national authorities not to act on their own when bailing out banks in the current economic crisis.

Today, her spokesman Jonathan Todd emphasised that other EU countries pitching in to prop up banks had complied with the formalities under EU state aid and competition laws, which give Brussels the final say in most cases.

He explained: "We have not received notification from the Irish authorities about the details. We received notification from the UK about Bradford & Bingley and that plan was approved yesterday.

"We received notification from the Belgian and Luxembourg authorities concerning Fortis, from Luxembourg concerning Dexia and from the German authorities concerning Hypo Real Estate. But we have received no notification from Dublin."

He went on: "Without notification, we cannot undertake our analysis and we cannot take a decision."

The EU Commission is waiting to assess whether what the Irish authorities are planning amounts to state aid which could be illegal under EU rules designed to ensure no unfair advantage from government subsidies.

With concern growing in other EU countries that investors will switch to Irish banks to take advantage of the sweeping deposit guarantees, the EU Commission is determined to put the Irish plan through its EU paces, despite the crisis conditions.

A state-aid decision might take only a matter of days, explained Mr Todd, as would consideration of a deal amounting to a temporary rescue package.

If the plan is deemed to amount to a restructuring programme, a lengthier inquiry might be needed, he said.

He added: "At the moment, without the formal details, we don’t know what it involves. Until we do know, and can analyse the plan, we lack legal certainty."