Government wants new development bank operating by end-year

Portugal’s minister of state, economy and digital transition, Pedro Siza Vieira, has told Lusa that he wants the country’s new development bank, the Banco Português de Fomento (BPF), up and running by the end of the year, after its creation was approved by the European Commission.

“Our goal is to have the Banco de Fomento fully operational by the end of the year, and to be a protagonist in what will be the very important funding needs that we will have during next year, to support a recovery process that we want to be very vigorous,” Siza Vieira told Lusa on Tuesday.

The minister said the timing was very important for Portugal, given the European Union executive’s approval of the creation of the BPF under the EU’s rules on state aid.

According to a statement from the commission this week, it has approved Portugal’s plans to create a new national development bank to promote economic growth.

According to Siza Vieira, the merger of Portugal’s existing Development Finance Institution (IFD), the SPGM (the Portuguese Mutual Guarantee System), and PME Investimentos, an institution that funds small and medium-sized enterprises, to create the new BPF, is good news for Portugal and Portuguese companies.

The BPF will, he explained, make it possible to serve the Portuguese economy in a more efficient and coordinated way and to make more resources available to support the financing of the economy at this crucial time.

According to Siza Vieira, the objective will be to involve BPF either in directly financing companies or to get it ever more involved as a national ‘green’ bank, financing of projects and initiatives aimed at the decarbonisation of the economy and the energy transition, as well as with a focus on a broad geographical spread of economic development.

Siza Vieira expressed the desire of the new institution to act on the evident market failures he identified, such as the financing of SMEs and micro-enterprises, as well as the lack of financing solutions for the very long term for projects that may be riskier, such as in the ecological, digital or innovation sectors.

Siza Vieira also told Lusa that the government was working with the Bank of Portugal on assessing the merger of the three institutions and the subsequent creation of the BPF.

“The Banco de Portugal has to assess the capital that the institution will be endowed with, its systems, its processes, its organisation, to have the confidence that we are creating an institution that is robust, that is credible from risk management and compliance with supervisory standards,” he said.