Brussels, 24 July 2013
State aid: Commission finalises discussions on restructuring plans for Portuguese banks CGD, Banco BPI, BCP
The European Commission has concluded that the restructuring plans of the three Portuguese banks Caixa Geral de Depósitos (CGD), Banco BPI (BPI) and Banco Comercial Português (BCP) are in line with EU state aid rules. In particular, the plans demonstrate that the banks are viable without continued state support, contribute to a sufficient level to the costs of restructuring and include adequate safeguards to limit the distortions of competition created by the state support.
"CGD, BPI and BCP are on the right track to become viable in the long term, in a challenging macroeconomic environment. I am also satisfied that the taxpayers’ money spent for the restructuring of the banks will be limited to the minimum as they will repay the state aid they have received, with an appropriate remuneration. We have therefore approved the restructuring plans of CGD and BPI and finalised our discussions with BCP." said Commission Vice-President in charge of competition policy Joaquín Almunia.
The Commission has taken decisions approving the restructuring plans of CGD and BPI. It has also reached an agreement with Portuguese authorities on the restructuring plan of BCP and plans to adopt a decision on this basis in the coming weeks.
According to the restructuring plans and agreement, the three banks will improve the profitability of their domestic operations, in particular by reducing their staff numbers and the size of their branch networks. They will strengthen their business models and ensure continued lending to the Portuguese economy. CGD furthermore will divest its largest subsidiary which is active in the insurance business; to that end, Portugal has already started a sales process in June 2013.
Caixa Geral de Depósitos (CGD)
CGD is fully state-owned and is the biggest banking group in Portugal. In June 2012, it received a capital injection of €1 650 million of core Tier 1 capital. In July, the Commission temporarily approved the measure (see IP/12/805). In December it opened an in-depth investigation regarding dividend payments (see IP/12/1395) that has now been closed because CGD committed to repay to Portugal an amount that is equivalent to the dividend payments.
Banco BPI (BPI)
BPI is Portugal's fourth largest bank. In June 2012, it received a capital injection of €1 500 million in the form of hybrid securities under a Portuguese recapitalisation scheme (see EXME/12/30.5). Meanwhile, BPI has already repurchased €580 million of those securities.
Banco Comercial Português (BCP)
BCP is Portugal's second largest bank and its largest private bank. In June 2012, BCP received also under the Portuguese recapitalisation scheme a capital injection of €3 000 million in the form of hybrid securities.
Portugal and the European Commission, the European Central Bank, and the International Monetary Fund agreed on an economic adjustment programme. The recapitalisation of the Portuguese banking sector is part of that programme. The need for State support to the Portuguese banking sector was to a large extent caused by a combination of the difficult economic environment, the sovereign debt crisis, and a tightening of capital requirements for banks. The recapitalisation measures allowed all three banks to comply with the applicable stress test requirements and to hold a sovereign buffer that was requested by the European Banking Authority.
As CGD, BPI and BCP received state aid, they were obliged to submit to the Commission restructuring plans that set out the exact restructuring measures which are taken to restore their long-term viability without reliance on State support (see MEMO/09/350).
Discussions between the Commission and Portuguese authorities about the fourth Portuguese bank having received state aid – Banif – are still on-going, in particular because that bank received state aid later than the other three banks.
The non-confidential version of the decisions will be made available under the case numbers SA.35062 (CGD), SA.35238 (BPI) and, once it will have been adopted, SA.34724 (BCP) 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