Brussels, 22/04/2009 (Agence Europe) - On Tuesday 21 April, the European Commission approved the UK's Asset-Backed Securities Guarantee Scheme, which forms part of UK measures to support the banking industry during the current financial crisis. In notifying the scheme, on 17 April 2009, London stressed the difficult situation of the UK housing market as a consequence of the credit crunch. The measure is intended to expand the funds available to banks to promote lending to homebuyers and homeowners. Under the scheme, investors will benefit from the guarantee provided to securities issued by special purpose vehicles collateralised with residential mortgages. Guarantees allocated under the scheme will be limited to a total of £50 billion. The Commission found that current conditions on the financial markets justify the scheme, which aims at facilitating banks to acquire liquidity and underpin lending to the UK real economy. It therefore concluded that the UK support measures are compatible with EC Treaty rules allowing aid to remedy a serious disturbance in a Member State's economy (Article 87.3.b), as explained in the Commission's Guidelines Communication on the application of state aid rules to banks during the financial crisis. Competition Commissioner Neelie Kroes said the measure would “help to reactivate the UK Residential Mortgage Backed Securities market and facilitate the restoration of more competitive mortgages for UK borrowers whilst avoiding disproportionate distortions of competition”. (O.L./transl.rt)