The European Commission approved on Thursday German rescue aid package for Hypo Real Estate group, a mortgage lender which fell prey to the global credit crunch.
The commission said in a statement that the measures to be taken comply with European Union (EU) rules on rescue aid.
By the end of September this year, Hypo Real Estate faced a liquidity crisis due to its short-term refinancing strategy as the crisis of confidence among banks worsened in mid-September.
With the intention of preserving financial stability, the German government together with a group of German financial institutions intended to provide loan guarantees totaling 35 billion euros (about 50 billion U.S. dollars), for covering Hypo Real Estate's re-financing needs until April 2009.
The commission considered that the guarantee provided by the German government constitutes state aid. However, the aid would enable the Hypo Real Estate to keep afloat for the time needed to work out a restructuring plan, so these aid measures could be authorized as rescue aid in line with EU rules.
"This case shows once again that, with good cooperation from the member state concerned, the commission can move very quickly," said EU Competition Commissioner Neelie Kroes.
The commission received details of those measures on Sept. 30, and made the approval within three days.
The financial crisis, which originated in the United States, is taking its toll on Europe recently, with several EU governments forced to inject billions of euros to save troubled banks, but all those measures have to be approved by the European Commission.
Source:Xinhua
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