The European Commission said today it had approved for now state aid involved in the rescue of Hypo Group Alpe Adria, but demanded that the Austrian bank present a restructuring plan by the end of March 2010.
"The Commission approved the measures temporarily for a maximum period of up to six months as urgent rescue aid to remedy a serious disturbance in the Austrian economy," the European Union's executive said in a statement.
It said it would deepen its investigation of previous state aid received by Hypo and its parent bank, German state lender BayernLB.
Austria took over Hypo this month to avoid a collapse, with BayernLB giving away its stake for a nominal amount.
The Commission said BayernLB had to revise the restructuring plan it submitted to Brussels to justify state aid to take account of the new rescue aid to Hypo.
"I expect both BayernLB and Hypo Group Alpe Adria to submit credible and substantiated restructuring plans to address the challenges emerging from this rescue operation and to bring the aid measures fully in line with EU state aid rules," EU Competition Commissioner Neelie Kroes said in the statement.
The Commission is the EU's competition regulator, which monitors whether any state aid is in line with the region's single market rules. It can approve such aid if companies present restructuring programmes.
Reuters