The European Commission will defy national pressure and stick to its main demands on the conditions for state aid to the bank sector when it publishes new guidelines shortly, EU sources said. EU Competition Commissioner Neelie Kroes is expected to issue the guidelines on Monday amid calls to the EU executive to approve bank support planned by France, Germany, Austria and others in the wake of the financial crisis. One bone of contention is the price banks will ultimately have to pay for the state help, with the Commission currently pushing for higher rates than those proposed by governments. Kroes said in a speech on Friday that for healthy banks the Commission accepted a pricing formula developed by the European Central Bank (ECB) which officials estimate sets a repayment rate of around 6-9 percent. She also repeated her view that this had to be adjusted upwards depending on the risk profile of each beneficiary bank. “That will not change. Kroes will not budge on that,” one EU source familiar with the guidelines told Reuters. The Commission was unlikely on Monday to recommend a single rate, but Kroes has privately favored a figure around the 10 percent mark, the source said. That compares with German proposals of rates of 5.5 percent and 8.5 percent for two tranches of cash totaling eight billion euros in support for Commzerbank.
