EU clears EUR 18 bn state guarantee for French bank

(BRUSSELS) - European Union watchdogs gave six-month temporary approval on Thursday for an 18-billion-euro ($23.7 billion) French state guarantee to real-estate bank Credit Immobilier de France (CIF).

The Commission said that the guarantee was needed to avert contagion in the French banking system.

"This guarantee is necessary to cover CIF's urgent liquidity needs and to give it time to draw up a restructuring or orderly resolution plan," a statement said.

France has six months to draw up a restructuring or orderly resolution plan following the provisional green light, Brussels underlined.

"The Commission acknowledges that the guarantee in favour of CIF is necessary to avoid a knock-on effect on the French banking system," the statement said.

Commitments to be honoured include "an acquisition ban, and a coupon and dividend ban," it added, with stricter conditions to apply to the granting of any new loans.

The final Commission will depend on the restructuring plan, the competition authority noted.