Brussels, 15/09/2009 (Agence Europe) - On Tuesday 15 September, the European Commission extended its investigation of system of aid provided by the Dutch State to the financial group ING. The Commission is particularly worried about the so-called illiquid assets back-up facility for a portfolio of €30 billion par value worth of US residential mortgage-backed securities.
The Commission initially authorised the measure for six months for reasons of financial stability on 31 March while opening an in-depth investigation to analyse the compatibility of the measure with Community rules on competition. According to the Commission, initial results from this investigation are not reassuring. In a press release published this Tuesday, the Commission expressed “doubts as to the compatibility of the measure with the Impaired Assets Communication, in particular as regards valuation and burden sharing”. Competition Commissioner Neelie Kroes emphasised that "the Commission supports member states' efforts to stabilise financial markets by dealing with banks' impaired assets. However, state aid in the form of impaired asset relief has to be properly remunerated and should not give undue advantages to banks”.
Taking account of input from external experts, the Commission press release indicated that it considers that the valuation seems at this stage “not conservative enough”. The Commission also declared that, Should the Dutch authorities not be in a position to address the Commission's concerns in a convincing manner, the Commission's final decision on the compatibility of the facility with EU state aid rules would have to require increasing the remuneration of the Dutch State. (C.D./trans/rh)