EU probes Banco Privado Portugues state guarantee

BRUSSELS Nov 10 (Reuters) - European Union competition authorities on Tuesday opened an in-depth investigation into Portugal's state guarantee to Banco Privado Portugues (BPP) [BPRAV.UL], saying it may have breached EU state aid rules.

The European Commission, which examines state aid to ensure it does not skew competition in the 27-country European Union, had approved in March the state guarantee for six months on condition that Portugal submit a restructuring plan for BPP.

BPP, a small investment bank, focuses on asset management for wealthy Portuguese clients and also holds shares in leading Portuguese companies, which declined in value last year.

The Commission said Portuguese authorities had not yet presented a bank restructuring scheme and had extended the guarantee on June 5 for another six months without notifying the EU executive. "The Commission has doubts that the state guarantee is still in line with its guidance communication on state aid to overcome the financial crisis in relation to both the duration and the pricing of the measure," the Commission said in a statement.

It has sent an injunction to Portugal, asking it to provide a restructuring or liquidation plan for the bank and to set out the measures it intends to take for the future of the bank that would also comply with EU state aid rules. (Reporting by Foo Yun Chee; editing by Karen Foster)