Brussels, 28/01/2010 (Agence Europe) - On Thursday 28 January, the European Commission approved a plan announced in June 2009 by Spain to recapitalise its banks that had fallen victim to the financial crisis. The Spanish scheme is based on the "Fondo de Reestructuración Ordenada Bancaria" (FROB) which has been provided with €9 billion with a debt facility of up to €90 billion to help the public authorities recapitalise undertakings experiencing difficulty.
The European Commission has authorised this mechanism until 30 June 2010. If Spain seeks to extend it beyond this date, a new green light would be required.
Spain is also required to submit to the Commission recapitalisation conditions for banks that are not fundamentally healthy, as well as a restructuring plan.
Competition Commissioner Neelie Kroes said: "The Spanish recapitalisation scheme will strengthen confidence in the Spanish banking system and, above all, encourage lending to the real economy. At the same time, the scheme establishes sufficient safeguards to limit disproportionate distortions of competition".
The Spanish plan to help banks is also supposed to facilitate sector reorganisation, particularly by way of assistance to mergers between regional savings banks. (L.C./transl.fl)