Brussels launches probe into Germany's WestLB state aid
Brussels - The European Union on Wednesday launched a probe into the five-billion-euro German state aid package granted to troubled bank WestLB, but said that the probe did not necessarily indicate any suspicion of wrongdoing, officials said in a statement.
The EU's executive, the European Commission, has opened "an in- depth investigation into state support measures in favour of the German bank WestLB. This is a first step towards finding a viable long-term solution, in close contact with the German authorities," a statement released in Brussels said.
"The opening of an investigation is common for state interventions of this magnitude and will ensure legal certainty for the companies concerned ... It does not prejudge the outcome of the procedure," the statement said.
In February, WestLB was one of the first European banks to run into difficulties sparked by the banking crisis in the United States. On February 8, the German state of North Rhine-Westphalia, where it is based, offered credit worth 5 billion euros (7.1 billion dollars) as a shield against future shocks.
The commission approved that as being compatible with EU rules on rescue aid, which state that such moves have to be limited to a six- month period and accompanied by a credible restructuring plan.
On August 8, the German government proposed a restructuring plan which included an extension of the shield.
The commission must now decide "whether the envisaged restructuring is capable of restoring the long-term viability of the bank, whether state support is limited to the minimum necessary, and whether compensatory measures should be put in place to minimise potential distortions of competition," the statement said. (dpa)