No state aid for Portuguese bank saved by EU

The European Commission has approved a recapitalization of 4.6 billion euro, more than half of them with public funds and issuance of new sovereign debt, to save Caixa Geral de Depositos (CGD), a Portuguese state bank that is in serious difficulties.

Under the agreement, the Portuguese Government will enter up to 2.7 billion in CGD and will convert into capital 900 million bonds while the bank itself has promised to raise capital for a billion in subordinated bonds.

The agreement with the government of Lisbon has been approved by the European Commissioner for competition Margrethe Vestager. A spokesperson announced that "The Commissioner Vestager last night reached an agreement in principle with the Portuguese authorities in the direction of allowing a recapitalization of Cgd at market conditions", adding that the fact that the agreement is to market conditions and that is, providing a revenue for national treasuries means that does not qualify as state aid.

The initial arrangement must now be formally approved by all the members of the Commission. Caixa Geral has been one of the Portuguese banks that have received a capital injection from the state in 2012 as part of the bailout program by 78 billion Euros signed by the country with international lenders. Nevertheless, with an economy still in great difficulty the government has judged necessary to recapitalize the group, 8,370 employees and 1,200 branches and is present in 23 countries, including Angola, Mozambique and Brazil.

According to the Minister of Finance Lusitanian, Mario Centeno, it is "an innovative pact with Europe", "good news for the entire Portuguese banking system"; more no impact on the deficit is expected by the operation.

The same time, Lisbon has promised rigor in the accounts with the commitment to bring the deficit / GDP ratio to 2.5% for this year, from the previous 4.5%.