EU approves Bradford & Bingley rescue plan

BRUSSELS, Oct. 1 (Xinhua) -- The European Commission swiftly approved on Wednesday the British rescue aid package for Bradford and Bingley, the British mortgage bank which fell prey to the global credit crunch.

The Commission said it had been in contact with the British authorities over the week-end to support in the design of measures that could comply with competition rules after the bank was forced sought emergency help from the government.

Britain notified the Commission on Sept. 30 and the approval was made within 24 hours in order to ensure financial stability.

"This case shows again that, with good cooperation from the member state concerned, the Commission can move extremely quickly to provide legal certainty for rescue measures," said EU Competition Commissioner Neelie Kroes.

Bradford and Bingley is a Britain-based financial institution, which provides specialist mortgages and savings products. By September 2008, the bank had fallen into difficulties due to the financial crisis and its license to accept deposits was withdrawn by the British Financial Services Authority.

The British government then decided to nationalize the bank and sell Bradford and Bingley's retail deposit book and branches along with a matching cash element to Abbey National, part of Spanish banking group Santander. The measure also included the provision of a working capital facility and guarantee arrangements.

The Commission said its assessment of these measures found that the state funding to enable the sale of the deposit book provided a state aid to Bradford and Bingley and to its retail deposit business that was sold. The Commission also concluded that the working capital facility and the guarantee arrangements constituted state aid.

But the Commission decided the measures could be authorized as rescue aid, which must be given in the form of loans or guarantees lasting no more than six months, except when structural measures are urgently required, which was the case for Bradford and Bingley.

The British authorities have given a commitment to submit a restructuring plan for Bradford and Bingley to the Commission by March 29, 2009.