Commission opens in-depth investigation into Portugal's state guarantee for Banco Privado Português

12 November 2009

Banco Privado Português was granted a state guarantee on a €450 million loan. The measure was approved for a period of six months, subject to the submission of a restructuring plan. Such a plan has not yet been submitted to the Commission.

The European Commission has opened - under EC Treaty state aid rules - an in-depth investigation into the state guarantee on a €450 million loan granted to Banco Privado Português by six Portuguese banks. The Commission initially approved the measure on 13 March 2009 for a period of six months, subject to the submission of a restructuring plan outlining the future of the bank without state aid. Such a plan has not yet been submitted to the Commission. On 5 June 2009 Portugal prolonged the guarantee for a further six months without prior notification to the Commission. The Commission has doubts as to whether the state guarantee is still in line with its Guidance Communication on state aid issued to help overcome the financial crisis in relation to both the duration and the pricing of the measure. The opening of a formal investigation procedure does not prejudge whether the measures concerned are in line with the EU state aid rules. It is a necessary step to ensure legal certainty for stakeholders and provides an opportunity to third parties to submit comments.

Competition Commissioner Neelie Kroes said: "The Commission has to assess whether the state guarantee for Banco Privado Portugues adequately addresses the bank's situation without unduly distorting competition, as well as check whether the plan that the Commission has invited Portugal to submit will be sufficient to deal with the situation of the bank without requiring additional state resources."

Banco Privado Português (BPP) is a financial institution providing private banking, corporate advisor and private equity services. In response to acute difficulties threatening its survival, on 5 December 2008 Portugal granted a state guarantee that was approved for six months by the Commission on 13 March 2009.

 

Press release

 

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