EU launches investigation into Anglo Irish Bank nationalisation

The European Commission will be investigating the nationalisation of Anglo Irish Bank to ensure the move is line with EU state aid and fair competition rules, a Commission spokesman said today.

Ireland's finance minister telephoned EU Competition Commissioner Neelie Kroes last night, warning of the impending nationalisation announcement - a day after Ms Kroes approved an emergency Irish government handout of €1.5bn for Anglo Irish Bank.

"The Irish government has now gone further and we will be looking into the issue in the next few days" said the spokesman.

"The Commission was notified of the nationalisation plan in advance, but we must now look at the details and our approval could depend on whether the government is paying a fair market price and whether there is any element of state aid in that price."

The Commission is fast-tracking the vetting of all national aid and rescue packages for banks in the current financial crisis: the approval of the original proposed €1.5bn recapitalisation of Anglo Irish Bank was approved yesterday only six days after Dublin formally notified Brussels of the move.

The Commission said the recapitalisation aid was in line with EU state aid rules being applied during the crisis.

The same consideration of the special circumstances will apply to the vetting of the nationalisation plan - but the Commission insists it has not waived the state aid rules and that any state support scheme must not distort fair competition in the banking sector.