The European Commission Tuesday cleared the Dutch government temporarily to provide ING Group NV (ING) help handling illiquid assets.
The commission, the European Union\'s regulatory arm, granted only a six-month clearance, since only parts of the Dutch plan comply with the bloc\'s state subsidy rules.
The commission wants E.U. governments to help banks deal with impaired or toxic assets. It hopes that with bad assets off banks\' balance sheets, stalled credit markets can be revived.
The Dutch government in January agreed to help ING with its $39 billion portfolio of U.S. mortgage loans, mostly consisting of Alt-A mortgages. This category of loans is rated between prime and sub-prime.
Under the plan, the Dutch government will buy the right to cash flows from 80% of ING\'s portfolio for about $28 billion.
The commission said it wants to further analyze the valuation of these assets. Final approval of the plan depends on the results of an in-depth investigation, the commission said in a statement.
"The treatment of impaired assets can be of help in restoring trust in the financial markets. It is, however, important that the state aid involved is carefully designed so that the Dutch state receives a sufficient remuneration for its support," the commission\'s top antitrust official, Neelie Kroes, said in a statement.
