BRUSSELS Feb 22 EU competition regulators gave temporary approval to a rescue plan for SNS Reaal of the Netherlands, saying the recapitalisation of the banking and insurance group was necessary for the stability of the Dutch financial system.
The European Commission, which acts as state aid regulator in the 27-member European Union, said in a statement on Friday it was approving the state-backed rescue for six months, during which time a restructuring plan will have to be drawn up.
"The Commission found that the recapitalisation of SNS Reaal is necessary to preserve the stability of the Dutch financial system, in line with the Commission's guidelines on state aid for banks during the crisis," it said.
"Indeed, the measures were required to allow SNS Reaal and its subsidiaries to comply with minimum capital requirements."
It said it was approving for now 300 million euros ($397 million) in recapitalisation for SNS Reaal, which will also receive a bridging loan of 1.1 billion euros. And it also gave temporary approval for 1.9 billion euros recapitalisation for the SNS Bank subsidiary.
The Commission's state aid regulators examine sizeable amounts of aid or funding provided by EU governments, to ensure it does not distort competition by giving aided companies an unfair advantage. ($1 = 0.7563 euros) (Reporting by Rex Merrifield)