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The Commission authorised a risk shield granted by the State of
Competition Commissioner Neelie Kroes said: "The Commission has demonstrated again that it can move very fast in order to provide legal certainty and financial stability to banks in difficulty. I look forward to continuing the good cooperation with the German authorities on the forthcoming restructuring of WestLB."
The Commission 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, in order for banks to meet special prudential requirements. 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 drawn under the guarantee. The reversibility of effects distinguishes the aid to WestLB from other state-guaranteed risk shields which the Commission is currently investigating.