The European Commission said on Tuesday it will loosen its state aid rules on national support to troubled banks, bowing to pressure from European Union (EU) member states.
"It is my goal that the commission will therefore approve before Christmas a series of additional aid possibilities to deal with the transmission of the financial crisis to the real economy," EU Competition Commissioner Neelie Kroes told a monthly meeting of EU finance ministers.
"The new temporary framework to support access to finance in the current financial and economic crisis include subsidized loans for environmentally friendly products, state aid for risk capital and state guarantees," she said. "These measures will complement and enhance the support given to banks."
Kroes made the remarks after Germany, France, the Netherlands and Sweden blasted the commission's approach in the review of national bank rescue plans.
"We do not approve of the schedule, of the procedure and above all of the commission's speed," said German Finance Minister Peer Steinbruck.
"You should not react to such a financial crisis in such a bureaucratic manner," said Steinbruck as he arrived for talks with his EU counterparts.
"We need to restore the credit channel. The commission has not been constructive," Swedish Finance Minister Anders Borg said. "I do think that we have to pull off these legions of state aid bureaucrats."
In the face of the worst financial crisis in decades, EU governments have committed in the past two months more than 2 trillion euros (about 2.54 trillion U.S. dollars) in a bid to shore up their financial institutions.
The commission has so far approved 20 national aid measures in 12 EU countries but is under pressure to be quicker and more flexible in examining national aid packages.
"We all have to be intelligent enough to show some flexibility," said French Finance Minister Christine Lagarde, whose country holds the EU presidency.
While pressed to loosen rules, Kroes defended her record.
"Our track record so far in this crisis has been honorable and we have already come some way in resolving banks' problems," she said.
Kroes said the commission's role in the field of competition policy has been to support financial stability not only by giving legal certainty to the measures taken by member states in rapid circumstances, but also to contribute to maintain a level playing field and to make sure that national measures would not simply export problems to other member states.
Germany has been unhappy with the commission's refusal to approve its recapitalization plan for Commerzbank, the country's second-largest bank by assets, which involves 23.2 billion euros.
It was reported that France was also angered that the commission is blocking its plan to lend 10.5 billion euros to the country's six retail banks to shore up their capital position, a claim denied by the commission.
Kroes said a meeting of experts from member states is scheduled on Monday, days ahead of a EU summit. (1 U.S. dollar = 0.7876 euro)
Source:Xinhua
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