Thaindian News

BRUSSELS (BNO NEWS) — The European Commission on Wednesday authorized under European Union state aid rules the extension of the bank support schemes in Ireland and Spain.

The guarantees schemes for credit institutions in both nations were prolonged for six further months, until December 31, 2011. The decision to extend the measures was made in line with the Commission’s guidance on support measures for banks during the financial crisis.

In recent times, the Irish and Spanish economies have been struggling and therefore, the guarantees schemes were designed in accordance to the EU Treaty as a way to remedying the serious disturbances.

The Commission has been authorizing guarantee schemes on banks’ liabilities for periods of six months in order to be able to monitor developments and adjust conditions according to the crisis rules for state aid to financial institutions.

The number of guarantee and liquidity schemes has gone from 16 at the end of 2010 to nine in the first half of 2011 as the financial situation improved. The use of state guarantees has also decreased as well.

The Spanish guarantee scheme was first approved on December 22, 2008. It was later extended in June and December 2009 as well as in June and November 2010. Ireland’s revised guarantee scheme was first passed on November 20, 2009, and extended four times last year.

In December 2010, the International Monetary Fund (IMF) and Ireland agreed to a financial package amounting $120 billion (€85 billion) through the European Financial Stabilization Mechanism (EFSM) and European Financial Stability Facility (EFSF).

In November 2010, the European Commission agreed on a joint financial support package for Ireland along the ECB and the IMF. Ireland accepted the EU bailout after intense negotiations that divided the government former Prime Minister Brian Cowen who eventually retired after failing to solve Ireland’s worst economic crisis in recent history.