EU probes state loan guarantee to Portugal's BPP
(BRUSSELS) - European Union competition regulators announced Tuesday a probe into a Portuguese state guarantee for a loan to bail out Banco Privado Portugues (BPP).
Portugal gave guarantees for a 450-million-euro (675-million-dollar) loan -- supplied by six national banks -- to troubled BPP in December 2008.
The European Commission, which polices competition in the 27 EU nations, gave its greenlight to the move for six months, provided Lisbon submitted a restructuring or liquidation plan for the bank.
But Portugal has not submitted the plan and prolonged its loan guarantee to the institution -- which provides private banking, equity services and corporate advice -- without notifying Brussels.
"The commission has to assess whether the state guarantee for Banco Privado Portugues adequately addresses the bank's situation without unduly distorting competition," said EU Competition Commissioner Neelie Kroes.
She said Brussels also wanted to "check whether the plan that the commission has invited Portugal to submit will be sufficient to deal with the situation of the bank without requiring additional state resources."
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