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EU Concerned Over Scope Of Irish Bank Deposit Guarantees

Oct 6, 2008 Market Outlook

BRUSSELS (Dow Jones)–The European Commission Monday said there are concerns that
the scope of the Irish government’s bank deposit guarantees goes beyond what the
commission considers acceptable under its rules on admissible state aid.

In general, the commission considers retail deposit guarantees to be acceptable
as they are unlikely to “give rise to distortions in competition,” the
commission’s spokesman Jonathan Todd said.

However, in the case of Ireland the guarantees are extended beyond retail
deposits, and the commission is looking into that. The Irish government is still
in the middle of sorting out the finer print, so it’s too early for the
commission to take any decisions, Todd said.

In the case of the German and Danish bank guarantees, the commission will assess
them under the state aid rules as soon as they have been notified, Todd said.

The commission’s chief spokesman Jonathan Leitenberger added that the commission
would continue to apply its state aid rules in a “flexible way” to ensure that
they were the correct tool to address the current financial crisis.

State aid rules “cannot stand in the way” of sensible market-oriented rescues,
Leitenberger said. They are “designed to provide for flexibility in exceptional
circumstances. And that is what’s happening,” he added.

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Technorati Tags: Bank Guarantees, Brussels, Chief Spokesman, Correct Tool, Crisis State, Danish, Decisions, Distortions, Dow Jones, European Commission, Exceptional Circumstances, Financial Crisis, Flexibility, Ireland, Irish Bank, Irish Government, Jonathan, Jonathan Todd, Scope, State Aid Rules

Tags: Bank Guarantees, Brussels, Chief Spokesman, Correct Tool, Crisis State, Danish, Decisions, Distortions, Dow Jones, European Commission, Exceptional Circumstances, Financial Crisis, Flexibility, Ireland, Irish Bank, Irish Government, Jonathan, Jonathan Todd, Scope, State Aid Rules