–Adds Comments By German Finance Ministry To Story Sent At 10:48 GMT
BRUSSELS (MNI) – The European Commission’s anti-trust arm on Friday
temporarily cleared more German government aid to lender Hypo Real
Estate (HRE), but said it still had doubts about the long-term viability
of the bank.
The EU’s executive arm said it “has temporarily authorized under EU
state aid rules a transfer of approximately E200 billion of toxic and
non-strategic assets into a winding-up institution, and additional state
guarantees of up to E40 billion…for reasons of financial stability.”
It said it will take a final view on the compatibility of these
measures with EU state aid rules in the context of its ongoing
investigation into the restructuring of HRE.
A Commission spokeswoman said Friday’s temporary approval did not
prejudge the final outcome of the investigation.
She said HRE is being split into two parts and one of the parts is
being relieved of a burden of toxic assets.
“The huge transfer of impaired assets to a ‘bad bank’ and the
additional state guarantees should contribute once and for all to
stabilizing Hypo Real Estate,” said Joaquin Almunia, EU Commission Vice
President in charge of competition policy, in a statement.
“The new aid measures will be included in the ongoing in-depth
investigation that can only be concluded when we can see the full
picture of the restructuring,” Almunia added. “At this stage I still
have doubts about the long-term viability of HRE.”
The German Finance Ministry said in a press statement after the
Commission’s decision that it is “very confident” it can clear up any
doubts about the long-term viability of the HRE.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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