Belgium, France and Luxembourg raised Wednesday the volume of state guarantees placed behind the remnants of failed banking group Dexia from 45 billion euros to 55 billion.
The decision was taken during talks in Brussels on Tuesday between the Belgian and French finance ministers, Steven Vanackere and Pierre Moscovici, and immediately received temporary clearance from European Commission competition authorities.
Only last week, EU competition commissioner Joaquin Almunia expressed doubts whether even the existing level of state aid would turn out to be legal, but already extended then by four months
Given those reservations, the Commission last Thursday extended by four months an investigation into an "orderly resolution plan" for Dexia, and prolonged temporary approval for the 45 billion euros of guarantees initially thought needed to re-finance the group.
On Wednesday evening, the Commission announced it had approved the 10.0-billion increase until 30 September, when a final decision will be taken on compatibility with EU state aid rules following its assessment of Dexia's resolution plan.
First bailed out in 2008 at the height of the global financial crisis, Dexia could not cope with the turmoil of the eurozone debt quagmire and in October the three countries stepped in to wind up the bank.
Belgium is responsible for the lion's share of the operation, putting up 60.5 percent of the financial guarantees as against 36.5 percent from France and 3.0 percent from Luxembourg.
European banks are back in the spotlight with a vicious circle of sovereign and banking debt taking a severe turn for the worse with major problems in Spain and EU leaders forced to talk of creating a eurozone banking union complete with plans for lenders to prepare for their own demise.