ANNOUNCED AS TEMPORARYNo
On 12 and 13 October 2008, the Portuguese authorities informed the Commission of their intention to put in place a special guarantee scheme for credit institutions registered in Portugal.
The measure - "Concessăo extraordinária de garantias pessoais pelo Estado, para o reforço da estabilidade financeira e da disponibilizaçăo de liquidez nos mercados financeiros" consists in the possibility for the State to grant guarantees forliabilities resulting from financing agreements and the issuance of non-subordinated debt of credit institutions incorporated in Portugal. It is aimed to support the access to liquidity of solvent credit institutions in Portugal in the context of the present financial crisis.
The scheme overall budget amounts to EUR 20 billion. The guarantee is be provided against a fee to be paid by the beneficiary. The beneficiaries of the scheme are all credit institutions incorporated in Portugal, including subsidiaries of foreign banks with registered office in Portugal. The Portuguese authorities estimate that about 51 to 100 credit institutions are eligible.
Portugal considers that the aid scheme is compatible with Article 87(3) (b) of the Treaty, in so far as it aims to remedy for a serious disturbance in the Portuguese economy.
"The Commission notes that the present guarantee scheme is financed with State resources. It provides an advantage to the credit institutions benefitting from the guarantee which, without State support and in the context of the present financial crisis, might otherwise face restrictions of access to liquidity in the financing markets. The measure thus gives an economic advantage to the beneficiaries and strengthens their position compared to that of their competitors in Portugal and other Member States not receiving the same type of aid. It distorts or threatens to distort competition and has an effect on trade between Member States." (par. 24 of the official letter of the EC to Portugal - Brussels, 17.12.2008 C(2008) 8686). Therefore the Commission finds that the measure therefore constitutes State aid within the meaning of Article 87(1) of the EC Treaty.
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis and concludes that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 33-43 of the official letter of the EC to Portugal - Brussels, 17.12.2008 C(2008) 8686).
Extensions of the Portuguese guarantee scheme - State aid N315/2010, SA.32158, SA.33178, SA.34034.
Since the notification of the orginal scheme (see above), Portugal notified five extensions of the scheme, justified by the following reasons:
"First, the Memorandum of Understanding ("MoU") signed between the Portuguese Government on the one hand, and the International Monetary Fund, the European Commission and the European Central Bank on the other hand, foresees measures for the banking sector which include the maintenance and the reinforcement of the scheme. Second, access to market capital by financial institutions in Portugal is currently almost inexistent, given the strong risk aversion for Portugal in the market that continues to affect significantly the capacity of liquidity management of Portuguese financial institutions, with no short-term perspective of improvement. Third, some credit institutions have recently requested the issuance of debt with a guarantee from the State." (par. 16 of the official letter of the EC to Portugal - Brussels, 21.12.2011 C(2011) 9935 final).
The guarantee scheme is therefore extended until 30 June 2012.
The Commission considered that the extension of the Guarantee Scheme were appropriate and necessary to remedy a serious disturbance of the Portuguese economy. Thus, it decided not to raise objections. (par. 26-37 of the letter)
Extensions: SA.34958 from 27 June 2012, SA.35743 from 17 December 2012, SA.36869 from 1 August 2013 and SA.37698 from 19 December 2013
On 1 July 2013, Portugal notified the Commission about request to extend the scheme until 31 December 2013.
The Portuguese authorities submitted a report on the operation of the scheme on 1 July 2013. As of 21 April 2013, the total amount of outstanding guarantees was EUR 16.225 billion, while EUR 5.25 billion have already been reimbursed. Furthermore, the EC "notes positively that Portugal does not change the size of the guarantee scheme" (para. 26, letter from the EC to Portugal, Brussels 1 August 2013).
The EC does not raise objections and reconfirms the appropriate, necessary and proportionate character of the measure (para. 37).
On 19 December 2013 the EC approved a prolongation of the scheme until 30 June 2014.
Even though the terms of the scheme stay the same, the total budget has been increased from EUR 24.12 billion to EUR 24.67 billion. (para. 11, letter from the EC to Portugal, Brussels 19.12.2013)
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
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