European Commission says approves Banco Espirito Santo rescue plan

BRUSSELS (Reuters) - The European Commission said on Sunday that Portugal's planned 4.9 billion euro ($6.58 billion) rescue of Banco Espirito Santo (BES) BES.L was in line with EU state aid rules.

“The adoption of this resolution measure is adequate to restore confidence in financial stability and to ensure the continuity of services and avoid potential adverse systemic effects,” the Commission said in a statement.

The Commission said a disorderly resolution of BES could have created a serious disturbance in the Portugues economy and that the creation of a temporary credit institution, holding deposits, senior debt and most of the assets, was a suitable remedy.

To limit market distortions, the latter’s new business would be limited, it said.

($1 = 0.7450 Euros)

Reporting By Philip Blenkinsop