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BRUSSELS/AMSTERDAM, Feb 22 (Reuters) - 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 approval would become permanent if the Commission has no objections to details of the plan once they are submitted.
“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.”
SNS Reaal was nationalised on Feb. 1 in a 10 billion euro ($13 billion) rescue because of continuing losses at the bank’s property finance operations.
But the decision by Dutch Finance Minister Jeroen Dijsselbloem has sparked a public outcry because of the cost to taxpayers, while subordinated bondholders and shareholders have said they will fight the nationalisation.
Dijsselbloem put the initial cost of nationalisation at 3.7 billion euros, consisting of a capital injection of 2.2 billion euros, and a further 1.5 billion euros to write down state aid and property assets. The state is providing 1.1 billion euros in loans and 5 billion euros in guarantees.
SNS Reaal has postponed publication of its 2012 results, and two former employees have been detained by the authorities on suspicion of bribery, fraud and money laundering, prosecutors said last week.
The European Commission said on Friday it was approving for now the 300-million-euro recapitalisation for SNS Reaal, which will also receive a bridging loan of 1.1 billion euros. It also gave temporary approval for a 1.9 billion euros recapitalisation for the SNS Bank subsidiary.
The Commission’s 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 in Brussels and Sara Webb in Amsterdam; Editing by Tom Pfeiffer)