EU Monitors U.K. State Aid to Northern Rock
The European Commission said on Tuesday it was monitoring events at British mortgage bank Northern Rock but it was too early to say whether guarantees pledged by the British government to worried depositors amounted to illegal state aid.
"It's too early to say," Commission spokesman Jonathan Todd said. "Generally speaking, the Commission does not have a problem with emergency support for a bank where there is risk of systemic collapse," he told a regular news conference.
"Where there is support, it normally has to be limited to six months duration and made available on commercial terms. If the duration is more than six months, then it has to be considered as restructuring aid so restructuring has to take place," Todd said.