Brussels, 15/07/2013 (Agence Europe) - On Thursday 11 July, the European Commission authorised the extension until 31 December 2013 of a Danish bank liquidation scheme and a bank merger scheme.
The two schemes are for market-funded solutions for struggling banks via orderly liquidation or, where possible, merging with another bank in order to stay in business. The Commission says that given the persistent problems on the money markets, it is small and medium-sized banks that are finding it difficult to raise cash on the money markets.
The Commission says the two extended schemes are a suitable answer to the problem and meet EU rules. The first scheme was initially authorised on 30 September 2010 for the orderly liquidation of a failed bank by selling assets to a bank resolution structure (see EUROPE 10226). It was amended in August 2011 to introduce a compensation scheme for the bank acquiring the assets, and then again in December 2011 to introduce compensation by the state if the failed bank is bought up using a competitive sales procedure or bought up after it is divided in two as part of the process of supporting struggling banks. The merger scheme was introduced in February 2012 to introduce a state guarantee for commitments in the event of a merger of two banks. (FG/transl.fl)