Brussels, 21 January 2013
State aid: Commission temporarily approves rescue recapitalisation of Portuguese bank Banif
The European Commission has temporarily approved, under EU state aid rules, a recapitalisation totalling €1.1 billion granted by Portugal to Banco Internacional do Funchal S.A. (Banif) for reasons of financial stability. Portugal committed to provide a far-reaching restructuring plan for Banif by 31 March 2013. The Commission will take a final decision on the compatibility of the capital injection with EU state aid rules after the assessment of the restructuring measures to be proposed by Portugal.
Commission Vice President in charge of competition policy Joaquín Almunia said: "The €1.1 billion recapitalisation allows Banif to meet regulatory capital ratios. Now, Portugal urgently needs to work out an in-depth restructuring plan, refocusing the bank on its core activities in Madeira and the Azores and leading to a significant downsizing of its operations."
On 11 January 2013, Portugal notified recapitalisation measures, consisting in a subscription of shares issued by Banif in the amount of €700 million and in hybrid securities in the amount of €400 million, in order to avoid a breach of capital requirements imposed by the Portuguese banking regulator.
The Commission assessed the state aid measures under its rules on state aid for banking recapitalisations during the crisis (see IP/08/1901 and IP/11/1488). The Commission found that the measures were well-targeted, limited to the minimum necessary and contained sufficient safeguards aimed at limiting distortions of competition. The Commission therefore temporarily approved the recapitalisation measures until 31 March 2013, or, if Portugal submits a restructuring plan by that date, until the Commission adopts a final decision on this plan.
In view of the significant aid the bank received with regard to its size (approximately 10% of risk weighted assets) and of the seriousness of its problems, this plan needs to provide for a material overhaul of the bank's business model, implying deep restructuring measures, a considerable downsizing and a limited future geographical focus.
Banif is currently the eighth-largest commercial bank in Portugal when measured by book asset value, with a large regional presence in the Azores and Madeira. It is listed on the Lisbon Stock Exchange. At the end of 2011, it held total assets amounting to €15.8 billion.
The non-confidential version of the decisions will be made available under the case number SA.34662 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.