Promotional Bank has new competencies

  • ECO News
  • 30 November 2016

The European Commission has approved the broadening of the bank’s competencies until December 31, 2020. The time limit may be extended.

The European Commission has given the all-clear for the broadening of the competencies of the Portuguese Development Bank Instituição Financeira de Desenvolvimento (IFD) in order to obtain financing from multilateral institutions or issue debt to help finance the Portuguese economy. ECO disclosed last week that the IFD made that request to Brussels, and it was accepted in just a few weeks – also due to the preparation work, although informally, done by the competent authorities.

“I consider today to be a very important day for the IFD, for Portugal and for the financing of Portuguese companies and entrepreneurs, because from this point on we can do on lending operations with mid-caps, and take action in the European Investment Plan, as do other European promotional banks”, José Fernando de Figueiredo told ECO. The president of the IFD stressed: “We must wait for the publication of the detailed version by the European Commission, within the next few days, to confirm if there are any issues”, but the head of the Institution does not anticipate “such a thing to happen”.

The IFD was, until now, limited to using 1.7 billion euros from Portugal 2020 that the Regional Operational Programmes have in store for financial instruments. But the European Commission “has found the extension of the remit of the Portuguese Development Bank Instituição Financeira de Desenvolvimento (IFD) to be in line with EU state aid rules”, as it is stated in the press release published by the EC this Monday.

“In October 2014, the Commission approved the creation and capitalisation of IFD, which manages and channels European Structural and Investment Funds (ESIF) allocated to Portugal for the 2014-2020 financing period, as well as reimbursements from ESIF-funded programmes”, is added in the same press release.

This “second stage” that now begins for the IFD means the wholesale institution financing the economy through debt financing may access the facilities of the German bank KfW, the BPI France or the Spanish ICO, but also issue debt in the market and then lend them to commercial banks at more favorable conditions and for a very long-term.

"Although slow and with many unexpected troubles, I still believe we can achieve the goal set by this board of directors, which is to create a strong financing mechanism for the economy, in Portugal, that can be of good use both for the country and companies.”

José Fernando de Figueiredo