The European Commission Friday extended its approval for the Irish Government's plan to assist the country's financial institutions cope with impaired assets.

Ireland developed the National Asset Management Agency last year as a "bad bank," with the sole aim to take non-performing real-estate loans off banks' balance sheets.

The Government announces its plans to pay for these distressed assets, which have a nominal value of roughly EUR80 billion, with roughly EUR54 billion in Irish government bonds.

"Ireland's financial sector has been one of the most affected by the global financial crisis in Europe and the burst of the Irish real estate bubble has only compounded the problems", said Competition Commissioner Joaquin Almunia in a statement today.

The Commission reveals that five Irish financial firms are in a process to use the impaired-asset plan. They are: Anglo Irish Banks PLC., Allied Irish Banks PLC., Bank of Ireland, Irish Nationwide Building Society and Educational Building Society.

The first EUR17 billion tranche of loan transfers to NAMA from the country's major financial firms will initiate next month now that the scheme has been cleared, Ireland's Finance Minister Brian Lenihan posted on Friday.