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UPDATE 1-EU sees more banks seeking aid after stress tests

Published 04/19/2011, 04:00 PM
Updated 04/19/2011, 04:04 PM

* EU's Almunia: expects more cases due to Portugal bailout

* State aid has to be approved by EU competition regulator

* EU has cleared dozens of aided bank (Adds background, byline)

By Foo Yun Chee

BRUSSELS, April 19 (Reuters) - Pan-European bank stress tests and Portugal's bailout may trigger a second wave of bank bailouts after the first round set off by the credit crisis more than two years ago, the EU's antitrust chief said on Tuesday.

Banking regulators across Europe are checking 90 banks across the region to see if they are financially stable by stress testing them.

The results, which sets a minimum level of capital for all lenders, are set to be published by the end of June and will highlight banks that need to bolster their finances.

The European Commission, the European Central Bank and the International Monetary Fund are now negotiating the details of Portugal's bailout, the third in the euro zone after multi-billion euro deals for Greece and Ireland.

"We expect to see more cases as a possible consequence of the program that is being negotiated with Portugal and the upcoming stress test exercise," EU Competition Commissioner Joaquin Almunia said in the text of a speech at a Global Competition Law Centre conference.

He did not provide details.

The EU executive has cleared dozens of state aid schemes for banks across the 27-country group since the credit crisis, usually requiring the lenders to stick to their core business, divest assets and refrain from making acquisitions until they have repaid the funds.

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Cases pending before the Commission for approval include Germany's WestLB [WDLG.UL] and BayernLB [BAYLB.UL] and Anglo Irish Bank [ANGIB.UL].

(Reporting by Foo Yun Chee; Editing by Richard Chang)

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