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4th Mar 2024

EU governments committed €3 trillion for bank bailouts

  • Belgian bank Fortis is among the banks having faced serious difficulties due to the financial crisis (Photo: EUobserver)

EU governments have committed €3 trillion to bail out banks with guarantees or cash injections in the wake of the global financial crisis, the European Commission said on Wednesday (8 April).

The money has been spent on "guarantee umbrellas, risk shields and recapitalisation measures for the financial sector," Brussels said in a report.

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Some €2.3 trillion went to financial guarantee schemes, some €300 billion to recapitalisation schemes, and around €400 billion were spent on other rescue and restructuring programmes.

The commission data also shows that while most member states have offered their banks some special guarantees, many central and eastern European states – including Slovakia, Romania, Poland, Lithuania, Estonia and Bulgaria – have not.

Analysts note that although these countries are as exposed to the crisis as the rest of the member states, their banks are mostly owned by western European ones and their governments do not have enough money for bail outs.

"The past six months have shown state aid control plays a key role in tackling the challenges of the economic crisis in a coordinated way across Europe," EU competition commissioner Neelie Kroes stated.

She also insisted that despite these aids, EU state aid rules had been respected all along.

"The EU's tried and tested state aid rules have clearly been part of the solution. Our intervention and – sometimes tough – conditions have prevented member states from falling into the trap of protectionism and exporting their problems to other member states, while allowing [them] to avoid financial meltdown," Ms Kroes said.

"The responsibility now lies with the financial sector to clean up their balance sheets and restructure to ensure a viable future," she added.

Since September, when the financial crisis began to worsen in Europe, the EU's executive arm has relaxed its rules, starting notably to judge aid packages faster.

It has taken more than 50 decisions on state aid since then, and had by 31 March approved 23 measures in 18 member states.

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