Brussels, 30/04/2008 (Agence Europe) - On Wednesday 30 April, the European Commission authorised, a risk shield to protect WestLB against the difficulties caused by the subprime crisis in the US. The State of North Rhine-Westphalia and regional savings banks want to provide a risk shield to WestLB of up to €5 billion against the volatility of its € 23 billion structured investment portfolio. The approval of the rescue aid does not, however, prejudice the Commission's assessment of the restructuring plan Germany has committed to submit by 8th August 2008.
Commission services concluded that the measure was in line with the EU Guidelines on state aid for rescuing and restructuring firms in difficulty. Under these rules, rescue aid must in principle take the form of loans or guarantees lasting no more than six months, with certain exceptions for the banking sector. The Commission explained that in order to avoid undue distortions of competition, WestLB will either present a restructuring plan or reverse the economic effects of the risk shield after six months, including the repayment of any amounts. (LC.)