The European Commission has temporarily approved, under EU State aid rules, an injection of €1,650 million of core Tier 1 capital into Caixa Geral de Depósitos SA for reasons of financial stability.
Portugal committed to provide a restructuring plan for CGD within six months of the injection. The Commission will take a final decision on the compatibility of the capital injection with EU state aid rules when assessing the restructuring plan.
On 28 June 2012, Portugal notified recapitalisation measures, consisting of a subscription of ordinary shares issued by CGD in the amount of €750 million and of hybrid securities in the amount of €900 million, in order to improve the capital of CGD so that the bank complies with the European Banking Authority (EBA) stress test requirements. The measures were announced by the Portuguese Ministry of Finance on 4 June and implemented on 29 June 2012.
The Commission found that the recapitalisation measures contain state aid, as they entailed the use of state resources and enabled the bank swiftly to raise capital in the prevailing market circumstances so as to satisfy the requirements of the EBA.
The Commission assessed the measures under its temporary rules on state aid for banking recapitalisations during the crisis. The Commission found that the measures were well-targeted, limited to the minimum necessary and contained sufficient safeguards limiting distortions of competition.
The Commission therefore approved the recapitalisation measures until 29 December 2012, or, if Portugal submits a restructuring plan by that date, until the Commission will have adopted a final decision on this plan.
Background
CGD is the biggest Portuguese banking group with sizeable international operations. It is fully owned by Portugal. At the end of 2011, it held total assets amounting to €120.6 billion.
Press release
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