EU to approve French bank rescue plan

Special Report:Global Financial Crisis

BRUSSELS, Dec. 8 (Chinese media) -- The European Commission will approve a French bank rescue plan on Monday after adopting new guidance on state aid rules, a top EU official said.

"The (European) Commission will adopt the French recapitalization scheme today," European Union Competition Commissioner Neelie Kroes told a press conference.

France unveiled a plan in October to lend 10.5 billion euros (13.3 billion U.S. dollars) to the country's six retail banks to shore up their capital position, but the plan was reportedly blocked by the commission for failure to comply with EU state aid rules.

France, angered by the commission's move, joined Germany and Sweden last week in criticizing the commission's approach in the review of national bank rescue plans.

Bowing to pressure from the member states, Kroes swiftly released on Monday new guidance on bank recapitalization, aiming to open possibilities for more state aid in the current financial crisis to boost credit flows to the real economy.

Kroes said the commission will also shortly approve an Austrian bank rescue scheme, which involves 100 billion euros (126.7 billion U.S. dollars) in bank guarantees and cash injections.

In addition, there is a chance for an "agreed solution" on Germany's plan to inject capital into Commerzbank after an expected adjustment, she added.

"I also expect that Germany will be requesting an adjustment of their national scheme, which should accommodate an agreed solution as regards Commerzbank," she said.

Germany has been unhappy with the commission's refusal to approve its recapitalization plan of 23.2 billion euros (29.4 billion U.S. dollars) for Commerzbank, the country's second-largest bank by assets.