European competition commissioner Joaquin Almunia has approved Ireland's programmes for restructuring Bank of Ireland and supporting the credit unions.

Image: Virginia Mayo/AP

THE EUROPEAN COMMISSION has today signed off on two major planks of the government’s plans to support the Irish financial sector.

The Commission has approved plans to restructure Bank of Ireland, and a resolution scheme for Credit Unions.

Brussels found the Credit Union scheme to be in line with its guidance on how states could assist domestic financial institutions, while it also signed off on revisions to the original BoI plan which will see the burning of certain junior bondholders.

Finance minister Michael Noonan welcomed both announcements, saying the BoI ruling had followed “several months of detailed analysis and assessment of the plan involving the European Commission, Bank of Ireland and the national authorities”.

“The Commission’s approval of the revised restructuring plan is another step in the achievement of the Government’s strategy of returning the banking system to long-term viability and profitability,” he said.

He also expressed gratitude to European competition commissioner Joaquin Almunia for signing off on the plan to underpin the viability of credit unions, which may invoke the need for some degree of State support in the sector.

The Central Bank now has the power to proceed with resolution procedures for Credit Unions wherever it deems them necessary.

The Commission approval for Credit Union intervention expires on June 2012, but is likely to be extended for as long as is needed, as the Commission only tends to approve schemes for six months at a time.

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