State aid: Commission opens in-depth investigation into payment of dividends by Caixa Geral de Depósitos

Brussels, 20-12-2012 — / — The European Commission has opened an in-depth investigation to examine whether a payment of dividends in September 2012 by Caixa Geral Finance Limited, an affiliate of Caixa Geral de Depósitos (CGD), is in line with EU State aid rules. In June 2012 CGD received a rescue capital injection from the Portuguese State amounting to €1.65 billion. The Commission had authorised the capital increase, subject to commitments including, in particular, a ban on the payment of dividends and coupons on hybrid capital (see IP/12/805). The Commission will investigate whether the dividend payments involve a misuse of the rescue aid that CGD had received and whether they constitute, in turn, state aid to the recipients. The opening of a formal investigation procedure gives interested third parties an opportunity to submit comments on the measures under examination. It does not prejudge the outcome.

When Portugal recapitalised CGD in June 2012, the bank could not have obtained financing under the same conditions from the market. The Commission therefore concluded that the capital injection from the Portuguese State constituted state aid.

Such aid should be used to restructure the bank. It should not be used to remunerate own funds when the activities of the beneficiary do not generate sufficient profits, as the Commission clarified already in 2009 (see MEMO/09/441). In the context of the restructuring of a bank, measures which reduce the total amount of own funds, like payments on hybrid instruments, are in principle not compatible with the principles that investors and owners of the bank need to share the burden of restructuring and that the bank should receive only the minimum aid necessary to allow it to restructure.


CGD is a banking group fully owned by Portugal. It held total net assets amounting to €120.6 billion as of 31 December 2011. The bank’s activities comprise, inter alia, nationwide and international commercial banking (notably, in Spain, Lusophone Africa and Brazil), investment banking, asset management, specialised credit business, and insurance activities.

In June 2012, the Republic of Portugal, as CGD’s only shareholder, subscribed to newly-issued ordinary shares of €750 million and to €900 million of hybrid securities. CGD needed the recapitalisation so as to meet regulatory capital requirements. One of the conditions for allowing this rescue aid was a commitment by the bank to not execute any payments to holders of capital instruments including subordinated debt in the bank.

On 28 September 2012, Caixa Geral Finance Limited, an affiliate of CGD, paid dividends on perpetual preference shares in the amount of €405 415 to institutional investors without the Commission’s consent.

The non-confidential version of the decision will be made available under case number SA.35062 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Contacts :Antoine Colombani (+32 2 297 45 13)

Maria Madrid Pina (+32 2 295 45 30)


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