European corporate banking support 'will remain'

Corporate banking will continue to receive support from the European Commission (EC), the organisation has announced, but those financial institutions that ask for help will be forced to meet stricter conditions.

The European Union (EU) temporary state aid crisis framework has so far been in place for two years, the economic community said in a statement, while its member states' collective economy is now at a "crucial juncture".

Banks that need financial assistance from January 1st 2011 will still be accommodated but in order to do so they will have to submit a restructuring plan.

Withdrawal of the framework remains a target, but the continent's financial system is still fragile, according to the commission.

Joaquin Almunia, EC vice-president in charge of competition policy, stated returning markets to their pre-recession state of normality must be done gradually.

"The remaining risk of renewed stress is a valid reason to proceed with care and caution in the exit process," he added.

Last month, the Irish government accepted a loan of around €85 billion (£72 billion) from the EU and the International Monetary Fund to save its ailing banking system. ADNFCR-2318-ID-800271383-ADNFCR