Recapitalisation of Banco de Fomento and InvestEU will release €9Bn

Portugal’s minister for the Economy Pedro Siza Vieira confirmed this week that the development bank, Banco de Fomento will be capitalised with an extra €250 million while funds from the EU programme InvestEU will mobilise €9Bn of finance for companies.

“With this support from the European Union and capitalisation for the Banco Português de Fomento we hope to be able to mobilise around €9Bn of financing in these important areas,” he said, pointing out that structural investments for SMEs and large companies, innovative projects, green sector projects and infrastructure and social impact projects would take priority.
The minister was speaking in Porto where he presented funds to support economic recovery and company capitalisation.
Siza Vieira explained that the Banco Português de Fomento (BPF) would be a “national partner for the implementation of the Invest EU programme” through which the European Union provides guarantees for loans provided by the banking sector.
“The Banco Português do Fomento will be working directly with the banking sector (in providing these loans). This means that we will allow Portuguese banks to grant credit in these strategic areas backed by the BPF in the first instance, and the European Union in the second,” he added.
In addition to almost doubling the current BPF’s capital (it was originally capitalised with €255 million), Pedro Siza Vieira also highlighted the creation of the Capitalisation and Resilience Fund which has been given €1.3Bn and could have a top up of a further €2.3Bn “if demand from companies justifies it”.
The goal is to “foster the capitalisation and access to credit for those companies which are not in the financial sector which need it, with a particular emphasis on ensuring the necessary solvency of these companies during the economy relaunch and recovery period”.
For example, on the back of this fund a programme will be developed aimed at reducing company debt, particularly debt from Portuguese Government-backed Covid-19 credit lines.
“The idea is for the capitalisation fund to develop, for example, a programme to reduce company debts owing whereby the capitalisation fund would grant a participatory loan to a company so that – together with funds injected by its own shareholders (in a 50/50 ratio) – it can contribute towards reducing its debt,” said the minister.