The Commission authorised the UK authorities' package of measures to support Northern Rock. The Commission received full details of these measures on 26th November 2007. The Commission has concluded that the measures comply with EU rules on rescue aid. Under these rules, rescue aid must be given in the form of loans or guarantees lasting no more than six months, although there are certain exceptions to these rules in the banking sector, in order to allow for prudential requirements, which have been applied in this case.
On 26th November 2007, following intensive contacts between the UK authorities and the Commission, the UK communicated the details of the measures taken. The Commission has studied these carefully and has concluded that the emergency liquidity assistance provided by the Bank of England on 14th September 2007, which was secured by sufficient collateral and was interest-bearing, does not constitute state aid. However the guarantee on deposits granted by the Treasury on 17th September, as well as the measures granted on 9th October, which provided further liquidity and guarantees to Northern Rock and were secured by a Treasury indemnity, do constitute state aid.
UK authorities have given a commitment to deliver to the Commission by 17th March 2008 a plan for Northern Rock going beyond the short term rescue. If a restructuring plan were to involve state aid, it would have to be assessed on its own merits under the rules on restructuring aid.
The approval of the rescue aid measures has no bearing on whether any future measures taken by the UK authorities to support a restructuring plan would be similarly approved.
Press release
FAQ
© European Commission
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article