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Brussels, 2 June 2010

State aid: Commission temporarily approves recapitalisation of EBS

The European Commission has authorised under EU state aid rules an emergency recapitalisation worth €875 million in favour of the Irish Educational Building Society (EBS) for reasons of financial stability. The Commission approved the measure temporarily as urgent rescue aid until it adopts a final decision on the restructuring plan submitted by the Irish authorities on Monday. It will assess in particular whether EBS becomes viable without continued state support.

"EBS needs a significant recapitalisation to comply – and to continue to comply in the coming years – with capital requirement rules. The measure is therefore appropriate to preserve financial stability in Ireland and can be temporarily approved to that end. EBS needs to be restructured to ensure it becomes a viable concern without public support ", said Competition Commissioner Joaquín Almunia.

On 30 April 2010 Ireland notified a €875 million capital injection into EBS, to meet regulatory requirements, in particular regarding core tier 1 capital.

The Commission authorised this measure as emergency aid to remedy EBS's financial difficulties and maintain confidence in the Irish financial markets. The Irish authorities last Monday submitted a restructuring plan for the company and the recapitalisation is temporarily approved until the Commission adopts a final decision on this plan.

EBS, a mutual company is owned by its members, i.e. by the depositors, is a building society with a balance sheet of €21.5 billion at the end of 2009. It provides financial services mainly to retail customers and small and medium-sized companies. Since 2005, EBS significantly developed its lending to the commercial real estate sector and was, as a consequence, severely affected by the financial crisis, and, in particular, by the commercial real estate crisis in Ireland.

The non-confidential version of the decision will be made available under the case number N160/2010 the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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