The European Commission said on Friday that it has opened an in-depth investigation to assess whether state aid granted by Portugal to Banco Internacional do Funchal S.A (Banif) was compatible with EU state aid rules.
In particular, reports online newspaper The Malta Independent, the European Commission said the final restructuring plan for Banif “should ensure that the bank becomes viable long-term whilst limiting distortions of competition brought about by the state support”.
In January 2013, the Commission temporarily approved state support of €1.1 billion to enable Banif to comply with capital requirements imposed by the Portuguese banking regulator, the site explains, adding that a final decision on the compatibility of support measures “requires the Portuguese authorities to propose – and the Commission to approve – adequate restructuring measures for the bank”.
A restructuring plan for Banif, submitted by Portugal, has been amended several times – most recently in October 2014.
The Commission said it is assessing the proposed measures under the EU rules on state aid for the restructuring of banks during the crisis.
At this stage, the Commission said it had “concerns as to whether the measures proposed complied with the requirements of these rules, which aim to restore the long-term viability of the bank and ensure that the use of taxpayer money is limited to the minimum necessary to achieve this result”, said the paper.
Banif is currently the eighth-largest commercial bank in Portugal, when measured by book asset value, with its main regional presence in the Azores and Madeira.
It is listed on the Lisbon Stock Exchange and at the end of 2014 it held total assets amounting to €13.1 billion.
In January 2013, Banif obtained a €1.1 billion state recapitalisation in order to be able to comply with minimum regulatory capital requirements. Portugal subscribed to shares worth €700 million issued by Banif and hybrid securities amounting to €400 million.
Article courtesy of the Portugal Resident http://portugalresident.com/
Comments
BANIF needed rescuing from foreigners by the Portuguese Government as it was set up to launder much of the European Union structural funds going missing in Madeira. Money which was just passing through towards offshores so not adding to the Banks net worth. Within its archives (if not already destroyed) would be much of interest to OLAF - the European Anti-Fraud Office!
The context is that as far back as June / July 2011 Banif had been downgraded to junk by Moody's - having been near junk by a Fitch valuation the year before.
Its current worth per share is 0.01 by Reuters and 0.0062 by FT. So not exactly a sound punt - particularly during an external 'investigation'. But as always it triggers a Portuguese investigation to lock down and hide the dirty washing before any foreigners get a look in.
http://www.reuters.com/finance/stocks/overview?symbol=BANIF.LS
http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=BANIF:LIS