EC Investigates Restructuring Of EBS

Business & Finance - Economy

Tuesday, 12 October 2010 09:01

Written by Conor Joyce

The European Commission has opened, under EU state aid rules, an in-depth investigation into the proposed restructuring of Educational Building Society (EBS), Ireland's biggest building society which benefitted from state support in various forms.

At this stage, the Commission says it has doubts whether the distortions of competition caused by the aid are sufficiently addressed in the restructuring plan. The opening of an in-depth investigation gives third parties the possibility to comment and does not prejudge the final outcome.

Commission Vice-President in charge of Competition policy Joaquin Almunia said: "Ireland has taken decisive action to strengthen EBS. The amount of aid received by EBS, however, justifies that we give interested third parties the opportunity to comment on whether the distortions of competition are adequately addressed ".

In June, the Commission temporarily authorised a €875 million capital injection in favour of EBS, the largest building society and the eighth largest financial institution in Ireland that focuses mainly on retail mortgage lending and saving products.

The recapitalisation resulted in the nationalisation of the financial institution, which has also received aid through asset purchases by the National Asset Management Agency (NAMA) as well as coverage under Ireland's extensive guarantee schemes.

A restructuring plan was submitted on 31 May. After a preliminary assessment of the plan, the Commission has concerns whether the distortions of competition caused by the aid to EBS are sufficiently addressed by the measures proposed in this plan.