|
|
The Commission is streamlining the system for bank rescue aid approvals, bypassing the need for the full commission to assess the impact of the bailouts on competition.
Its decision to speed up the process reflects the severity with which the commissioners and governments in member states assess the current situation. The commission today authorised the
Over the weekend the commission worked with
Authorities in the
At the same time, the commission is reviewing plans for several other banks in
In order to speed up assessments which previously could have taken weeks or months, the commission is introducing a new process for reviewing state aids. Instead of going to the full 27-member commission for review and approval, Competition commissioner Neelie Kroes, internal market commissioner Charlie McCreevy, and economic and monetary affairs commissioner Joaquin Almunia will assess the bailouts in conjunction with commission president José Manuel Barroso.
Such expedited rescue aid approvals can go only some way to help restore confidence. The prospect of the commission rejecting a rescue plan in which it has had at least some input and for which the guidelines are reasonably clear is extremely remote.
But at the same time, the regulator can hardly sit by if the financial fabric of the single market is being torn apart.
The Irish situation is a case where there are issues of discrimination against certain banks and which is unlikely to have been as closely co-ordinated with the commission as the individual bank situations in the
It is in the longer term, however, that competition issues are more likely to arise across the board.
In individual rescue situations, governments still have to submit restructuring plans for the banks within six months, and it is these plans that will require much more scrutiny.
The commission – also today - did just that when it opened an in-depth investigation into state support measures in favour of German bank WestLB. As a consequence of investments in
Restructuring aid reviews, by contrast, usually take several months to complete and can run into two years or more. The consequence of the reviews is usually a much scaled down banking operation following substantial asset sales, and the withdrawal of the state from the bank.
With more and more banks requiring restructuring, large scale consolidation in the sector – albeit much of it a couple of years down the line – is inevitable.
But some of that consolidation is happening already now, and the consequences on competition appear to be conveniently pushed aside.
A case in point is that the approval of the rescue aid in the Bradford & Bingley situation doesn’t resolve the competition issues being raised by the current restructuring in the
With the sale of Bradford & Bingley's retail deposit book and branches along with a matching cash element to UK lender Abbey National, the UK government has ensured a very large chunk of UK retail banking is in two hands – Lloyds-TSB and Spanish giant Santander.
Abbey National owner Santander recently acquired another UK bank with strong mortgage lending and retail saving roots in the building society sector, Alliance & Leicester.
The deal is expected to require merger control approval by the European Commission, the Spanish company has told MLex, although
And this follows hot on the heels of another rapidly arranged deal in the
That deal is to be reviewed by the OFT, but any decision made by the anti-trust regulator may then be overridden by the Secretary of State for Business and
Such public interest defences or suspension of the normal competition rules may well end up open to legal challenge, not least from potential competitors and consumer groups who could bear the brunt of an incumbent bank’s increased market power.
By Robert McLeod