EC investigates state bailout of WestLB

EUROPEAN Union regulators extended their temporary approval of the state bailout of German lender WestLB yesterday while they investigate whether the rescue complies with EU rules.

The European Commission, which had approved conditional state aid for WestLB, said data provided by the bank was more complex than expected and it needed extra time to assess how much money had been provided.

The Commission approved €5bn (£4bn) in state aid for WestLB in May 2009 on the condition that the bank implement ed its restructuring programme according to EU rules.

The programme involved transferring WestLB’s toxic and non-strategic assets to a “bad bank”, which would be liquidated gradually.

“The Commission’s current investigation explores whether this transfer and all related payments are in line with the general rules... and whether on this basis the restructuring of WestLB is apt to restore the long-term viability of the bank,” the EC said.
WestLB said it was confident of winning final approval.