EU sets new bank bail-out rules

The European Commission overseas competition issues

Banks which receive state help must show they have a viable future without further support under new guidelines published by the European Commission.

Aided banks must pay some of their restructuring costs, the commission said, and may have to sell assets and hold back on acquisitions.

"We need to make banks viable again without state support and re-invigorate competition," said an EU statement.

It has so far cleared 70 rescues by European nations.

'Working seriously'

There may be constraints imposed on acquisitions or on aggressive pricing and marketing strategies funded by state aid, it said, in order to limit distortions of competition.

"The financial crisis may not be over yet, but we need to start working seriously with member states to restructure European banks," added Competition Commissioner Neelie Kroes.

The new rules will be in force until the end of December 2010.

The commission - which oversees competition issues in the 27-member European Union - also said it would take account the financial crisis when assessing bank restructuring plans.

It comes after the commission had agreed to restructuring plans by Germany's Commerzbank and WestLB that included reducing their balance sheets.