Econostrum | Economic News in the Mediterranean

The European Commission authorises the Portuguese State to recapitalise its development bank

Written by Eric Apim on Tuesday, April 12th 2022 à 10:55 | Read 272 times

The authorisation of the recapitalisation of the Banco Português de Fomento, Portuguese Development Bank, will allow this institution to help Smes affected by the consequences of the health crisis.

PORTUGAL. The Portuguese economy will be able to benefit from a €250 million aid measure from the Portuguese State allowing the recapitalisation of Banco Português de Fomento (Portuguese Development Bank - BPF) in the framework of the Recovery and Resilience Facility (FRR). On Monday 11 April 2022, the European Commission authorised this support to this national institution in charge of economic development. It is the result of the merger by incorporation of several investment companies and was officially created in November 2020 to create "a single financing company designed to support national and international projects, to promote sustainability and economic development", according to the terms of the decree establishing it.

According to the European Commission, this recapitalisation is "necessary and appropriate to improve access to finance for sectors, projects or companies experiencing difficulties in obtaining sufficient financing on the market. The measure is also proportionate, given that BPF's balance sheet remains relatively small compared to other development institutions in the EU".

On the other hand, the European Commission, concerned to avoid competition-distorting public support, notes that "the measure presents sufficient safeguards to avoid undue negative effects on competition and trade in the EU. In particular, GMP financing activities will be subject to measures to ensure that private investors will not be crowded out if they want to provide financing to companies.

Facilitating access to finance for SMEs

BPF will use this money, in collaboration with commercial banks operating in Portugal, to facilitate access to finance for companies affected by the consequences of the health crisis. This is particularly true for SMEs, with the aim of "boosting competitiveness and job creation in the long term", as stated in a European Commission press release.

The measure will also contribute "to the achievement of the EU's strategic objectives of ecological and digital transitions, as well as economic cohesion, productivity and competitiveness". The support will focus on four areas: sustainable infrastructure; research, innovation and digitisation; social investment and skills; and SMEs.

In its Recovery and Resilience Plan - presented in April 2021 and approved in June 2021 by the European Commission as part of the European NextGenerationEU plan adopted in November 2020 - Lisbon had indicated that this recapitalisation of Banco Português de Fomento was the necessary condition for this structure to become the Portuguese national partner in charge of implementing the InvesEU programme launched in April 2019.

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