EU begins Rock investigation

2 April 2008

Government assistance of stricken lender Northern Rock is to be the subject of a European Union (EU) probe.

The bank received emergency funding last year, after running into financial trouble in the credit crunch.

After failing to sell Northern Rock on to a private backer, ministers announced in February that the lender would be temporarily nationalised - plans which still need EU approval.

However, the nature of this support has raised concerns that overall industry competition could be harmed - necessitating the probe.

European competition commissioner Neelie Kroes, announcing the investigation, said: "The Commission needs to ensure legal certainty, notably in view of the large scale of the aid measures, the background of current conditions in financial markets and the risks of distortion of competition."

There has been around £55 billion worth of loans and guarantees to Northern Rock from the government in recent months.

The EU's investigation is to report later in the year.

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