EU approves Italian recapitalization scheme for financial institutions

Special Report:Global Financial Crisis　

BRUSSELS, Dec. 23 (Chinese media) -- The European Commission on Tuesday approved an Italian aid scheme that will provide capital instruments to "fundamentally sound" financial institutions in the country.

The European Union (EU)'s competition guardian said it found the scheme to be in line with EU rules on state aid to overcome the financial crisis after the Italian government agreed to make certain amendments to the original plan.

"The Italian recapitalization scheme provides effective means of strengthening confidence in the markets and, above all, of financing the real economy in a period of crisis, while at the same time establishing safeguards to limit distortions of competition," said EU Competition Commissioner Neelie Kroes.

The recapitalization measures, which will cost an estimated 15 to 20 billion euros (21 to 28 billion U.S. dollars), will make it possible for Italy to subscribe subordinated debt instruments, to be counted as the banks' core capital.

The Italian government said only "fundamentally sound" banks will be eligible for the recapitalization.