EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 19 March  2013  
on the recapitalisation  of credit institutions  
(CON/20 13/19) 
 
Introduction and legal basis  
On 7 and 13 February  2013, the European Central Bank (ECB) received separate request s from the 
Portuguese Minis ter of State and f or Finance and the President of the Portuguese Parliament , respectively,  
for an opinion on a draft law  (hereinafter the ‘draft law’)  amend ing Law No 63-A/2008 of 
24 November  2008 establishing measures to strengthen the financial soundness  of credit institutions 
(hereinafter the ‘Law on recapitalisation’ ). Given that the subject matter of both consultations is the same, 
the ECB has  decided to consider  both requests  together  and issue one opinion.  
The ECB’s competence to deliver an opinion i s based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and on the third and sixth indents of Article  2(1) of Council 
Decision  98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
autho rities regarding draft legislative provisions1, as the draft law  relates to the Banco de Portugal and to 
rules applicable to financial institutions insofar as they materially influence the stability of financial 
institutions and markets. In accordance with  the first sentence of Article  17.5 of the Rules of Procedure of 
the European Central Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft law 
1.1 The draft law introduces changes  to the Law on recapitalisation,  as amended and republished by 
Law No 4/2012 of 11 January  2012, on which the ECB adopted its Opinion CON/2011/952 on 
22 November 2011. The Law on recapitalisation was one of the actions considered necessary under 
the Economic Adjustment Programme for Portugal, with a view to restoring confidence in the 
banking sector and financial stability in the economy. It aims at reinforcing the resilience of the 
banking sector  by establishing the conditions and procedures for providing temporary public 
support to viable credit institutions having their head office in Portugal. 
1.2 The Portuguese Government undertook , under section 2.15 of the Memorandum of Understanding 
on Specific Economic Polic y Conditionality, to propose amendments to the legal framework 
governing access to public capital  in order to ( a) allow the State, under strict circumstances and in 
                                                           
1  OJ L 189, 3.7.1998, p. 42.  
2  All ECB’s opinions are published on the ECB’s website at www.ecb.europa.eu.  
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2 accordance with S tate Aid rules, to exercise control over a  credit  institution , and ( b) impose 
mandatory recapitalisations with recourse to public funding. 
1.3 In view t hereof, the draft law aims mainly at:  
(i) lifting the prohibition  under Article 2(2) of the Law on recapitalisation on the State acquiring 
control of a credit institution by exercising voting rights , and  
(ii) allowing mandatory recapitalisation of credit institutions by the Stat e on a proposal from the 
Banco de  Portugal . 
In addition, the draft law  aims at : 
(iii)  reducing the requirements for shareholders meetings convened specifically to decide on 
amendments to the articles of association  necessary for a recap italisation  operati on under the 
law, 
(iv)  prohibiting the acquisition of State shares by new or existing  shareholders during the 
investment period if there is a materially relevant breach of the recapitali sation plan, and  
(v) improving the procedures for credit institutions  to access public funds and State guarantees.  
 
2. Mandatory recapitalisation  
2.1 Interaction of mandatory recapitalisation with the resolution framework  
The ECB welcomes that t he amended law will empower the Banco de Portugal to propose the 
mandatory recap italisation of viable  credit institutions, if this is necessary to preserve financial 
stability. The ECB believes that the B anco de Portugal  is best placed to assess and propose such 
recapitalisation , as it is required  to have  carried out a viability assessment3 and to have evaluat ed 
the overall circumstances justifying intervention with public funds  in a given credit  institution  
including , notably , the expected return to the State from the investment in line with U nion State 
Aid rules  and the terms and con ditions of public disinvestment. Nonetheless, the ECB underlines 
that recapitalisation of distressed credit institutions with public funds should be a temporary 
measure4 and, as such , it may not resolve the difficulties of the benefiting credit institution  in the 
longer term. In particular,  it is important that such S tate intervention  (a) should not be used to 
circumvent the application of the resolution framework and (b) ensures  the least cost ly approach to 
resolving financial diff iculties of distressed  credit institutions , whilst safeguarding public funds as 
much as possible5. The Banco de Portugal should,  in the case of any credit institution  which does 
not achieve the required capital ratios by its own efforts,  assess whether the conditions  for 
triggerin g the resolution framework, which explicitly states that shareholders and creditors should 
                                                           
3  See proposed Article 16(5) . 
4  See Communication from the Commission — “The recapitalisation of financial institutions in the  current financial crisis: 
limitation of aid to the minimum necessary and safeguards against undue  distortions of competition ”, point 11 (OJ C 10, 
15.1.2009, p. 2 ). 
5  See, in part icular,  Opinion CON/2013/3, para graph  6. 
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3 first bear the losses6, have been fulfilled . A mandatory recapitalisation by the S tate may be found to 
be a viable option pursuant to that assessment , in order to pr event the failure of the credit institution  
in question, so that its entry into resolution may not be required.  
2.2 Shareholder rights  
The ECB welcomes the fact that the draft law allows for an effective intervention in a credit 
institution by the State, by means of the exercise of the proprietary right to vote its shares even if 
this means the State will acquire control of the institution. This will foster the State’s influence in 
the institution concerned with the aim of preserving financial stability and  thus protecting the 
public interest7. However, as far as mandatory recapitalisation under Article 16 of the draft law is 
concerned, any overriding of shareholder rights would require careful consideration in the light of 
shareholder rights protected under  Union company law directives. In this respect, the ECB 
underlines that   such overriding of shareholder rights  might be considered, as a measure of last 
resort, if systemic and financial stability are at stake.  
 
This opinion will be published on the ECB’s  website.  
 
 
Done at Frankfurt am Main, 19 March 2013.  
 
[signed]  
 
The President of the ECB  
Mario  DRAGHI  
                                                           
6  See Article 145B (1) of the Legal Framework of Credit Institutions and Financial Companies  (Decree- Law298/92 of 
31 December 1992) . 
7  See Opinion CON/2011/72, paragraph 6.1.