EU Commission Pledges Bank Aid Rules Shortly

European Union Competition Commissioner Neelie Kroes, facing fierce pressure from member states to approve state aid to banks stricken by the credit crisis, pledged on Tuesday that the EU executive would approve new rules shortly.

Kroes said in a statement after meeting EU finance ministers that the European Commission expected banks that receive state aid to give commitments to lend to the real economy.

"The Commission will shortly adopt a communication giving detailed guidance on how to assess such recapitalisations under the state aid rules," she said.

France, Germany, the Netherlands and Sweden are among countries that have piled public pressure on Brussels to clear capital injections or other forms of assistance for banks.

Such aid has been held up because of concerns over the impact on competition in the EU's single market.

Kroes said there must be strong incentives for state aid to banks to be repaid as soon as possible, without going as far as banning banks that receive public money from paying dividends.

Banks' individual situations should be taken into account, she told the EU ministers.

But safeguards remained necessary to limit any distortion of competition and ensure that state capital injections did not increase banks' profits.

French President Nicolas Sarkozy and German Chancellor Angela Merkel last week warned Brussels in a joint letter to other EU leaders against "pernickety supervision" of national bank rescue schemes in the midst of the financial crisis.

Swedish Finance Minister Anders Borg stepped up the attack on Tuesday, telling reporters: "The Commission has not been constructive. I do think we have to call off these legions of state aid bureaucrats."

However, chief European Commission spokesman Johannes Laitenberger disputed suggestions that the EU's state aid rules were being shredded by member countries.

"Quite honestly, I cannot see anyone seriously calling for tearing up the rulebook," he told a news briefing.

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