Brussels, 20/07/2010 (Agence Europe) - The state guarantee on a €450 million loan granted in 2008 to Banco Privado Português (BPP) constitutes illegal state aid and is incompatible with the internal market. On Tuesday 20 July, the European Commission therefore ordered Portugal to recover the aid. It has four months to inform the Commission of the steps it has taken to also try to recover the difference between the guarantee fee paid by BPP and what it should have paid.
Joaquín Almunia, the European commissioner in charge of competition policy declared: “We got no such restructuring plan for BPP, which was later put into liquidation and the loan paid by the state. It is in the interest of taxpayers in Portugal that the state makes its best efforts, like the other creditors, to try to recover the aid granted”.
The Commission, in early 2009, temporarily approved the loan guarantee as emergency support on the condition that Portugal submitted a restructuring plan within six months. As the Commission did not receive the plan despite several reminders, in November 2009 it opened a formal investigation procedure. Having received no restructuring plan, the Commission's decision concludes that the aid is illegal. While the liquidation of the bank addresses the competition distortion stemming from the aid, the Portuguese government must file its claim as a creditor in the liquidation procedure and recover from BPP the difference between the price the bank should have paid for the guarantee and the lower fee actually paid, including accrued interest. Portugal has stated that it has already filed the necessary claims to enforce its privileged and priority rights over the collateral it holds over BPP and that it will continue to do so until it has recovered the full loan which it had to pay to the creditor banks in execution of the guarantee.