The
European Commission has concluded that Portuguese plans for setting up a
financial institution (the Instituição Financeira de Desenvolvimento,
IFD), were in line with EU state aid rules. The IFD, funded by the Portuguese state and European Structural and Investment Funds (ESIF),
will manage holding or specialised funds and provide SMEs with access
to funding on a co-investment basis with private investors. In
particular, the Commission found that the measure would address market
failures that hamper SMEs access to finance, without unduly distorting
competition in the Single Market.
In
August 2014, Portugal notified to the Commission plans to create the
IFD, whose starting capital of €100 million will be fully subscribed by
the Portuguese state. Portugal has committed to notify any further
capital injection into the IFD to the Commission for state aid scrutiny.
The IFD will manage and channel European Structural and Investment Funds (ESIF) allocated to Portugal for the 2014-2020 financing
period, as well as reimbursements from ESIF-funded programmes. The IFD
will manage holding funds or specialised funds, with co-investment from
private investors, with the objective to address market failures
hampering SMEs' access to debt, equity and quasi-equity funding. The
present decision does not cover any other activities of the IFD, with
which it may be charged in the future, and which may need to be notified
to the Commission for approval.
The Commission assessed this
measure under Article 107(3)(c) of the Treaty on the Functioning of the
European Union (TFEU), which allows granting aid to support the
development of certain economic activities. The Commission found in
particular that the measure was an appropriate and proportionate means
of providing finance to SMEs where a market failure is demonstrated.
Distortions of competition will be limited as the IFD will be a
wholesale player providing financing via other financial intermediaries
and will generate co-investment by private investors.
Given that the market for SME
financing, and in particular the scope of the market failures may
evolve, the Commission has granted the approval until 31 December 2020.
This may be prolonged following a reassessment.
Background...
The
IFD will be subject to the Portuguese banking law and supervised by the
Bank of Portugal. It has a licence to operate as a financial
institution, as opposed to a credit institution, with the consequence
that it will not be allowed to take deposits.
In conducting its activities, IFD will strictly follow the ESIF Partnership Agreement between Portugal and the Commission (see IP/14/885), the respective operational programmes and the rules applicable to the use of ESIF, which recall the requirement to comply with the state aid rules.
The non-confidential version of the present decision will be made available under case number SA.37824 in the State Aid Register on the competition website
once any confidentiality issues have been resolved. New publications of
state aid decisions on the internet and in the Official Journal are
listed in the State Aid Weekly e-News.
