Portuguese Republic and EIB sign Portfolio State Guarantee for up to EUR 2.8 billion

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Portuguese Republic and EIB sign Portfolio State Guarantee for up to EUR 2.8 billion

  • Available in: de en fr pt
  •  Release date: 07 December 2012
  •  Reference: 2012-191-EN

EIB releases last tranche of EUR 450 million for co-financing projects with EU Funds in Portugal

The European Investment Bank (EIB) and the Portuguese Republic today signed a Portfolio State Guarantee for up to EUR 2.8 billion. The portfolio covered by such a guarantee could reach a maximum of EUR 6 billion creating a significant leeway for future transactions and investment opportunities. The bank also released EUR 450 million to the Portuguese Republic to help meeting the objectives of the Portuguese National Strategic Reference Framework. This is the last tranche of a framework loan of EUR 1.5 billion approved in September 2010, the largest loan the EIB has ever granted in Portugal.

Werner Hoyer, EIB President, stated: “The challenges for Portugal to rebalance its public accounts and reform the stagnant business environment are enormous. It is an extremely painful process, but I am confident and convinced that this path will be successful. The EIB is committed in assisting Portugal in these times of a challenging economic and financial environment.”

Vitor Gaspar, Minister of State and Finance, stated: “Countering financial market fragmentation is an urgent task: if this is not urgent, nothing is.“ He also commented: “The EIB, with its triple A rating, is ideally suited to contribute to counter financial market fragmentation. Today we agreed on a very innovative idea: the Portuguese State will provide a 20-year irrevocable portfolio guarantee worth EUR 2.8 billion. That will enable the EIB to cover its EUR 5 billion exposure to Portugal and provide the ground for an additional EUR 1 billion for new operations.”

The Portfolio State Guarantee for up to EUR 2.8 billion will be an effective alternative to other collateral hence minimizing the impact on commercial banks’ liquidity and enable to restore compliance with the Bank’s standard credit criteria of a significant part of the existing EIB exposure to projects and banks in Portugal. It will also allow the continuation of EIB support to new projects in the country while maintaining credit quality. The investment portfolio covered by such a guarantee, including existing and expected new exposure, could reach a maximum of EUR 6 billion creating a significant leeway for future transactions and investment opportunities. 

The EIB stands also ready to help identifying projects under the guarantee scheme, particularly in the following sectors: selective infrastructure, small and medium enterprises, knowledge economy and human capital, export facilitation finance, foreign direct investment and energy efficiency and climate change. The signature of the Portfolio State Guarantee follows an agreement signed in July 2012 to foster cooperation between Portuguese Republic and the EIB through different schemes for co-financing or guarantee new EIB facilities, involving, notably, the State and Structural Funds.

The EIB loan of EUR 450 million will be used by the Portuguese State to fund the national contribution to projects also supported by EU Structural Funds, in the context of the 2007-2013 National Strategic Reference Framework (NSFR). The loan will contribute to the country's absorption of EU Structural Funds and will mainly focus on small and medium sized investment schemes of less than EUR 50 million across the country. It will, therefore, contribute to the balanced development of all Portuguese regions and will have a significant impact on local employment and SME activity.

This EIB is a long-standing partner of Portugal. The Bank started supporting the Portuguese economy even before the country’s adhesion to the European Communities in 1986. So far EIB loans to projects in Portugal reached about EUR 40 billion, of which EUR 12 billion were granted since the outbreak of the financial crisis in 2008.

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