Economy EU’s Vestager says keeps close eye on state aid for banks

EU’s Vestager says keeps close eye on state aid for banks

European Competition Commissioner Margrethe Vestager.
European Competition Commissioner Margrethe Vestager.

EU regulators are keeping a close eye on subsidies granted by national governments to troubled banks to make sure that this does not give them an unfair advantage, Europe’s competition chief said on Friday.

The comments by European Competition Commissioner Margrethe Vestager at a conference in Florence came as ailing Italian bank Monte dei Paschi seeks to resolve its mass of bad loans without direct state support.

Italy is also struggling to sell Banca Marche, Banca Etruria, CariChieti and CariFerrara to salvage at least part of the 3.75 billion euros (3.44 billion pounds) that other Italian lenders stumped up in their rescue.

Sources familiar with the matter said interested parties have offered low bids because of worries that the banks would need to write down further their problem loans.

“We need to look carefully at aid for banks,” Vestager told a conference organised by the International Bar Association. She did not name any banks.

“And our rules on state aid have the same goal: they make sure public support doesn’t take the place of private investment and that it does not give unfair benefits to some,” Vestager said.

Governments across the 28-country bloc have pumped billions of euros into their banks in the last eight years due to the financial crisis. The lenders have had to sell off non core activities, halt dividend payments and are banned from making acquisitions in return for EU approval for their bailout.