Brussels, 21/12/2015 (Agence Europe) - On Monday 21 December, the European Commission announced its decision to authorise Portugal's plans to provide public support of a total value of €3 billion for the resolution of the bank Banco Internacional do Funchal SA (Banif).
Of this aid, around €2.25 billion will be used to cover the resolution financing deficit of Banif. Further support of €422 million will cover the transfer of depreciated assets into an asset management vehicle. Finally, aid will be granted in the form of a public guarantee to respond to any recent changes in the value of the part of Banif which is to be sold to Banco Santander Totta. This aid of €3 billion comes on top of public support of €1.1 billion, which was approved temporarily by the Commission in 2013. The Commission was forced to note that despite the aid received, Banif had failed to return to viability on its own. However, the additional aid will make it easier to sell a large part of Banif's activities to a stable purchaser and will allow the activities transferred to return to viability within the new entity. The Portuguese authorities also notified the Commission that their attempts to sell the bank without state aid had proved unsuccessful. In total, Banco Santander Totta will acquire €11.1 billion worth of assets and liabilities, including deposits. Around €2.2 billion worth of depreciated assets will be transferred to a vehicle which belongs to the Portuguese resolution fund and sold at a later date. The Commission also notes that the shareholders and subordinated debt-holders of Banif fully contributed to the cost of the resolution, which reduced the need for state aid. Additionally, Banif's withdrawal from the market will help to avoid competition distortions.
In a separate decision, the Commission approved the extension of the Portuguese public guarantees issued for bonds of a total of €3.5 billion issued by the Portuguese bank Novo Banco. Novo Banco is the bridge bank set up in August 2014 following the resolution of Banco Espirito Santo SA. The Portuguese authorities have committed to new restructuring measures for Novo Banco, such as going into greater depth in the operational restructuring of the bank and its current efforts gradually to reduce its activities in commercial divisions and regions seen as non-essential. The Commission also welcomes the intention of the Portuguese authorities to resume the sales process of Novo Banco in January 2016. (Original version in French by Elodie Lamer)