EU clears Belgian 3.5 bln euro KBC recapitalisation

BRUSSELS (Reuters) - The European Commission on Thursday approved Belgium's emergency 3.5 billion euro ($5 billion) recapitalisation of KBC (KBC.BR), aimed at helping the banking and insurance group through the financial crisis.

"The capital injection is necessary to maintain the market's confidence in KBC and to ensure its contribution in providing loans to the real economy," European Union Competition Commissioner Neelie Kroes said in a statement.

Due to the crisis, the European Union has relaxed its rules governing state aid and subsidies to private enterprises.

The Commission, executive arm of the 27-country EU, said the recapitalisation met with its criteria for state aid and was an adequate remedy to a serious disturbance in the Belgian economy.

It added that the cash should avoid undue distortions of competition and was limited in scope.

(Reporting by Anne Jolis, editing by Dale Hudson)