In June 2012, the government of Portugal announced a change in private-sector financial support.



  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 29 Jun 2012 | Removal date: open ended

Capital injection and equity stakes (including bailouts)

On 28 June 2012, Portugal notified to EU on their intention to recapitalize the Caiya Geral de Depositos (CGD). CGD is a banking group fully owned by the Portuguese state. The banks activities consist of investment banking, asset management, specialized credit business and insurance activities. (par. 4, Letter from the EC to Portugal, Brussels 18.7.2012)
Due to the recession of the Portuguese economy and a decreasing profitability, CGD's capital needed to be increased by 1.65 billion (par. 10). This recapitalization has been done by:
a) a capital increase of EUR 750 million in the form of ordinary shares (par. 13), and
b) a EUR 900 million subscription of convertible instruments ('Hybrid Securities') (par. 14).
The EC argues that "the capital increase provided by Portugal ... allows CGD to secure capital on more favorable terms than would otherwise be possible in the light of the prevailing conditions in the financial markets. As such, that measure also gives rise to an advantage to the bank" (par. 39).
Finally, the EC states that "the recapitalisation measures are both likely to affect trade between Member States. They give CGD an economic advantage, strengthening its position compared to that of its competitors in Portugal and other Member States. They must, therefore, be regarded as distorting competition and affecting trade between Member States." (par. 41).
On 23 July 2013, the European Commission approved the state aid notified by the Portuguese government.
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