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European Commission begins investigation into EBS plan

The European Commission begins its probe into the plans of the state-owned building society, which is up for sale.

THE EUROPEAN COMMISSION has begun investigating the proposed restructuring of the nationalised EBS Building Society, with its approval needed before the restructure can go ahead.

The commission, which says it is concerned about the level of government involvement in the banking sector given the number and size of institutions which have fallen into public hands since the state committed to recapitalising ailing institutions.

Brussels says it wished to make sure that the restructuring plan would tackle the problem of over-reaching government influence, adding that its first impression was that the restructure – submitted for approval on May 31 – offered EBS an unfair advantage.

“Ireland has taken decisive action to strengthen EBS,” said competition commissioner Joaquin Almunia. “The amount of aid received by EBS, however, justifies that we give interested third parties the opportunity to comment on whether the distortions of competition are adequately addressed.”

The commission offered a temporary authorisation for a €875m recapitalisation of EBS in June.

The Irish Examiner suggests that the Commission may ask EBS to curtail its business activity in order to justify the massive public bailout, if it finds that the government recapitalisation gave the institution an unfair competitive advantage.

Finance minister Brian Lenihan is expected to announce Irish Life & Permanent and Cardinal Asset Management as the remaining two bidders for the institution, which has been up for sale since mid-summer, later this week.

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