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European Commission

Press release

Brussels, 28 October 2014

State aid: Commission approves creation of Portuguese development financial institution

The European Commission has concluded that Portuguese plans for setting up a financial institution (the Instituição Financeira de Desenvolvimento, IFD), were in line with EU state aid rules. The IFD, funded by the Portuguese state and European Structural and Investment Funds (ESIF), will manage holding or specialised funds and provide SMEs with access to funding on a co-investment basis with private investors. In particular, the Commission found that the measure would address market failures that hamper SMEs access to finance, without unduly distorting competition in the Single Market.

In August 2014, Portugal notified to the Commission plans to create the IFD, whose starting capital of €100 million will be fully subscribed by the Portuguese state. Portugal has committed to notify any further capital injection into the IFD to the Commission for state aid scrutiny.

The IFD will manage and channel European Structural and Investment Funds (ESIF) allocated to Portugal for the 2014-2020 financing period, as well as reimbursements from ESIF-funded programmes. The IFD will manage holding funds or specialised funds, with co-investment from private investors, with the objective to address market failures hampering SMEs' access to debt, equity and quasi-equity funding. The present decision does not cover any other activities of the IFD, with which it may be charged in the future, and which may need to be notified to the Commission for approval.

The Commission assessed this measure under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows granting aid to support the development of certain economic activities. The Commission found in particular that the measure was an appropriate and proportionate means of providing finance to SMEs where a market failure is demonstrated. Distortions of competition will be limited as the IFD will be a wholesale player providing financing via other financial intermediaries and will generate co-investment by private investors.

Given that the market for SME financing, and in particular the scope of the market failures may evolve, the Commission has granted the approval until 31 December 2020. This may be prolonged following a reassessment.


The IFD will be subject to the Portuguese banking law and supervised by the Bank of Portugal. It has a licence to operate as a financial institution, as opposed to a credit institution, with the consequence that it will not be allowed to take deposits.

In conducting its activities, IFD will strictly follow the ESIF Partnership Agreement between Portugal and the Commission (see IP/14/885), the respective operational programmes and the rules applicable to the use of ESIF, which recall the requirement to comply with the state aid rules.

The non-confidential version of the present decision will be made available under case number SA.37824 in the State Aid Register on the 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.

Contacts :

Antoine Colombani (+32 2 297 45 13, Twitter: @ECspokesAntoine )

Yizhou Ren (+32 2 299 48 89)

For the public: Europe Direct by phone 00 800 6 7 8 9 10 11 or by e­mail

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