BRUSSELS—The European Union has opened an in-depth investigation
into Portugal's €1.1 billion restructuring of local lender Banif,
saying that the state subsidies may have violated EU competition
rules.
Portugal's government injected €1.1 billion of fresh capital
into Banif in January 2013 to allow it to meet minimum capital
thresholds imposed by the banking regulator.
The government subsequently submitted a restructuring plan for
Banif, which was amended several times, most recently in October
2014.
The European Commission, the bloc's top antitrust regulator,
said Friday that the restructuring plan might have breached EU
rules, which require that the bank and its owners contribute
sufficiently to the cost of its restructuring, and limit
distortions to competition.
"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," the commission
said in a statement.
The EU will now seek feedback from the parties involved before
coming to a final decision. If the regulator decides that Portugal
did breach EU competition rules, it could require the government to
recover all or part of the €1.1 billion of state support.
It said the decision to open a formal investigation didn't
prejudge its outcome.
The Portuguese Finance Ministry said in a statement that the
commission's probe, which it called "procedural," doesn't have any
impact on Banif's financial situation, and it doesn't affect the
recapitalization plan currently under way.
"The Portuguese authorities are following the process, in
straight collaboration with the European Commission, in order to
make the necessary clarifications to the commission and assure the
compatibility of the help given to Banif with the rules of state
support," the ministry said.
Banif acknowledged the investigation in a statement.
Write to Tom Fairless at tom.fairless@wsj.com
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