Portuguese Banks Get EC Approval for Restructuring Plans

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Recently, the European commission decided to allow restructuring plans for 3 different Portuguese banks including CGD, BPI, and BCP. The commission concluded that the banks all work out just fine with EU state aid rules.

This is important because if this wasn’t the case the restructuring could’ve been blocked and then it wouldn’t have been allowed to go forward which could have had serious repercussions for the area in terms of commerce and other concerns.

The EC explained that it wants to show that the banks can be viable even without state contributions and that they could contribute to the restructuring as well as adding the safeguards needed to help with the distortions already created by state support in terms of competition.

The EC went onto say that the three banks are just fine in terms of viability in the long term. There was obviously a lot of questioning about this over the past few months, since many people wondered whether the three banks could really make it not only on the short term, but also over the long term since their viability was generally in question.

This is important because Portuguese banks often have a huge contributing factor in how well the local economy does, so many people were wondering and even demanded to know about viability in order to make sure that money won’t be thrown away in helping the restructuring of the banks, since this can often happen in times like these when it comes to bank restructuring

That’s why the announcement helps a lot since it helps to put these statements to rest concerning viability and it helps everyone feel much better about the situation in general.

The EC representative went on to say that they were generally satisfied concerning how the taxpayer’s money was spent on the banks. Taxpayers are often seen as having a right to ask how their money is spent after all, and many people don’t want their money to be thrown away on banks if they are just going to fall apart or spend the money in a less than useful way since it will be like all that money is wasted.

The EC confirmed that all of the money will be limited to the least amount necessary, since they will repay the state aid they’ve received in the long run. This is in contrast to many other institutions that never repay the money they’ve spent from the taxpayers.

The aid will even be given remuneration so the banks will pay for the money they receive. That’s why the EC approved the decision to restructure the banks in Portugal. Info also came out recently that the banks will be able to become much more profitable as a result of this aid, especially when it comes to operations of a domestic nature. This will apply specifically to making staff numbers lower, and to reducing the branch networks. The will be able to make their business models stronger and help the Portuguese economy significantly as a result of the aid coupled with the restructuring techniques they will be required to go through as a result.

AS of last June, Portugal has already starts sales processes in order to make sure the insurance side of the business is all taken care of properly.

Published in: Business / Money