EC moves closer to break-up of banks rescued by state aid
THE prospect of a break-up of Lloyds Banking Group and Royal Bank of Scotland (RBS) moved closer yesterday, after the European Commission (EC) called on banks to present plans to restructure themselves.
EC competition commissioner Neelie Kroes said bailed out banks would have to detail their plans to the EC within six months, to prove that they could operate without further financial support.
“The financial crisis may not be over yet, but we need to start working seriously with member states to restructure European banks,” said Kroes.
“We need to make banks viable again without state support and to reinvigorate competition in the single market.”
EC guidelines, due to come into force by the end of December 2010, include measures to force banks which have received state aid to dispose of assets, as well as curbs on acquisitions, marketing strategies and aggressive pricing.
Kroes warned last month at a British Bankers’ Association conference that RBS and Lloyds were likely to be told do divest assets to comply with EU rules on antitrust.
The EC said stress tests would determine which assets banks should dispose of or wind up.