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The European Commission said on Monday it was confident that measures by the Belgian, Dutch and Luxembourg states in a rescue of financial services group Fortis would comply with EU competition rules.
It also said the presence of European Central Bank President Jean-Claude Trichet at weekend moves by the Benelux governments to rescue Fortis showed it was a "joint effort" by EU and national authorities to respond to a cross-border situation.
"We are confident that the accompanying measures which are going to be notified will be compatible with the rules on competition, in particular the rules on state aid," Commission competition spokesman Jonathan Todd told a daily briefing.
"Up until now the national authorities in Belgium, the Netherlands and Luxembourg have been listening to what the Commission has been saying, so we have no reason to think that what they are going to notify the Commission of is not going to be acceptable to the Commission in terms of state aid rules."
Todd said the governments' injection of 11.2 billion euros ($16.4 billion) via an equity stake appeared to be based on market rates. Chief Commission spokesman Johannes Laitenberger told the same briefing the presence of Trichet at the talks showed that EU authorities were co-ordinating their response.
"What we saw this weekend is that the system works, and it works both nationally and also trans-nationally," he said. Asked about the impact of the package on Belgian finances - seen running a small deficit this year - a Commission spokeswoman noted that such capital injections would in principle impact a country's public debt rather than deficit.
The collapse in Fortis's share price and the subsequent rescue effort demonstrated the spill-over effect of the US subprime crisis on the euro zone. Separately, Germany has confirmed it is providing credit guarantees to lender Hypo Real Estate, and Todd said the Commission had not yet had contacts with German authorities on the matter.

Copyright Reuters, 2008

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