Brussels/Paris - A spokesman for the European Commission on
Monday denied that Brussels was blocking the French bank bailout,
after French media reported that the 10.5-billion-euro (13.24-
billion-dollar) plan was in trouble.
'There is no blocking. The commission is working with the French
authorities,' European Commission spokesman Johannes Laitenberger
told reporters in Brussels, adding that a decision on the plan could
come as early as this week.
Laitenberger said the commission was not against any increase in
lending by French banks. 'We just want to assure that the money is
used to provide loans to the real economy,' he said.
He noted that officials in Brussels were 'surprised' by the French
media reports.
The daily Le Figaro headlined its front page on Monday 'Brussels
blocks plan of support for French banks,' while Le Monde reported
that Paris and Brussels were engaged in a 'tug-of-war' over the
measure.
The stories were based on comments by European Commission
President Jose Manuel Barroso during an interview on French
television on Sunday, when he had suggested that Brussels was taking
a hard look at the French plan.
'The commission's duty is to apply the rules. If the rules are not
respected, you get the law of the jungle,' he said, noting that the
EU was particularly wary of 'competitive distortions' being
introduced into the European banking sector
Under the French proposal, the government would subscribe to
subordinated five-year debt issued by the six banks. In exchange, the
French banks would commit themselves to increasing their loans to
individuals and companies by 3 to 4 per cent in 2009.
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