(BRUSSELS) - EU finance ministers backed plans on Tuesday to curb the powers of national banking regulators to block mergers in the sector, which have come under fire over concerns about protectionism.

The new rules aim to reduce the period during which regulators can scrutinise a deal and tighten the conditions for blocking a proposed foreign acquisition.

Under existing EU rules, national regulators can block proposed mergers and acquisitions if they consider that the deal threatens the "sound and prudent management" of the target company.

The European Commission made proposals last September to tighten rules on the authority of central banks over bank mergers after the Italian central bank and Polish regulators were widely seen as having used their powers to discourage foreign takeovers.

"This directive is necessary because ... unncesseray obstacles were put forward by national supervisors," EU Internal Markets Commissioner Charlie McCreevy told journalists.

"The clarity of this directive will help in ensuring that there is an unhindered way of doing business in acquisitions in the financial services sector," he added.

Under the new rules, national banking regulators will only be able review merger deals according to the buyer's reputation, financial health, the reputation and experience of the new company's management, respect for EU rules and risks of money-laundering or terror financing.

They would also have only 60 days instead of three months to examine such deals and they would be able to suspend a proposed tie-up only once.

Cross border mergers in the sector are currently a hot topic with Barclays seeking to tie up with Abn Amro and ING reported to be seeking a Belgian partner.

Economic and Financial Affairs Council - Conclusions

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