The European Commission has published a press release where it states that it has approved the prolongation of the Credit Guarantee and Recapitalisation Schemes, which form part of the UK's support measures to the banking industry during the current financial crisis.
The original measures were approved by the Commission on 13 October 2008 and modifications were approved on 23 December 2009. The UK notified an extension of the schemes until 13 October 2009 because the severe stress in the global and UK financial markets that required the original Credit Guarantee and Recapitalisation schemes continues to exist.
The Commission's investigation found that the circumstances on the financial markets justify the extension which aims at underpinning lending to the UK real economy. Banks that benefit from the schemes have to agree in turn to provide loans to companies in the real economy and to individuals. The Commission therefore concluded that the UK support measures, as amended, are compatible with Article 87.3.b of the EC Treaty as explained in the Commission's Guidelines
Communication on the application of state aid rules to banks during the financial crisis.