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1.5 bln Euro injection into Ethias allowed by Commission
The European commission has approved the Belgian Government’s financial aid amounting to Euro 1.5 billion for the insurance and banking group Ethias on February 16. Corresponding with the Commission’s communication providing guidance on state aid it is another measure in the long row of the Member states’ capital assistance projects to overcome the current financial crisis. The aid is limited to the minimum needed to enable the Ethias group to continue operations and is allowed for a maximum length of six months. EU Competition Commissioner Neelie Kroes commented on the decision by saying "This capital injection will enable the Ethias group to weather the financial crisis. The group can now draw up a restructuring plan to ensure its long-term viability. The Commission has once again demonstrated that it can take effective decisions on measures aimed at stabilising the situation of enterprises affected by the crisis once it is in possession of full information and sufficient commitments."
Because of the economic crisis, the Ethias group is facing a serious downturn and a sudden fall of its financial assets value combined with a massive withdrawal of investors. Drop in the solvency margin coverage resulted in an urgent need for a state intervention. In compensation for the capital injection, the authorities will acquire a stake in Ethias group giving it a preferential claim on future profits.
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