EU Approves Modified British Financial Bailout Plan

The European Commission said on Tuesday it has approved modifications to Britain's financial bailout plan.

The amendments mainly concern the fee payable on guaranteed liabilities and the widening of the range of currencies in which the guaranteed instruments can be issued.

The modifications will bring the British scheme in line with those in other member states and support the provision of credit to the British economy, the European Union (EU)'s competition guardian said in a statement.

Britain won approval from the Commission for its original financial bailout plan in October, which costs about 500 billion pounds (744 billion U.S. dollars) in shoring up financial institutions hit by the financial crisis.

The British government last week notified the Commission of a set of modifications it intended to make to its support measures to the banking industry, which were aimed at adapting the package to the Commission's newly released rules on recapitalization and to bring it in line with schemes in other member states.

Under the modifications, Britain will also guarantee debt instruments issued in Japanese yen, Australian dollars, Canadian dollars and Swiss francs as from next years.

Previously, the eligible debt was limited to instruments in sterling, U.S. dollars or euros.

The fee payable on guaranteed liabilities will be based on a per annum rate of 50 basis points plus 100 percent of the institution's median five-year Credit Default Swap (CDS) spread during the period from July 2, 2007 to July 1, 2008.

The Commission said it was satisfied that the British support measures to the banking industry have been adjusted to changing market conditions.

Source: CRIEnglish