Press Release: State aid: Commission approves aid for restructuring of Dunfermline Building Society

The European Commission has approved under EU state aid rules the aid given by the UK authorities to facilitate restructuring of the Dunfermline Building Society of the United Kingdom. The restructuring consisted of the immediate split-up of Dunfermline, after which the part containing the good assets and liabilities was sold in an auction to a competitor with a financial contribution by the UK State of over £1.5 billion. The part containing the impaired assets was put into administration. The Commission found that the orderly break-up of Dunfermline resulted in the return to viability of the good part that was sold. The Commission furthermore concluded that there was sufficient burden-sharing as subordinated debt-holders contributed to the restructuring as much as possible and that the liquidation of a substantial part of Dunfermline limited the distortion of competition caused by the aid. The Commission therefore concluded that the direct restructuring is compatible with the EU rules on state aid to remedy a serious disturbance in a Member State's economy (Article 87(3)(b) of the EC Treaty).