BRUSSELS: The European Commission has approved Portugal's plan to provide more than 2.25 billion euros ($2.44 billion) of state aid to ease the sale of troubled bank Banif (BANIF.LS) to the local unit of Spain's Santander (SAN.MC), it said on Monday.
The EU executive has allowed for up to 3 billion euros in state aid, to include a state guarantee to cover recent changes in value to the stakes sold to Santander Totta.
"Banif had already received significant state aid but could not become viable again on its own," Margrethe Vestager, Commissioner in charge of competition policy, said in a statement.
"The measures approved today now enable Banif's orderly exit from the market and for a robust bank to take over a large part of its activities to the benefit of its customers."
In January 2013 the Commission had temporarily approved state support of 1.1 billion euros to allow Banif to meet minimal capital requirements.
It said at the time that it had concerns over whether the measures met the requirements under EU rules, which aim to restore the long-term viability of the bank and ensure that the use of taxpayer money is limited to the minimum necessary.
In a separate statement, the Commission, which acts as the competition watchdog in the 28-member European Union, approved a prolongation of Portuguese state guarantees on bonds issued by Portuguese bank Novo Banco in the nominal amount of 3.5 billion euros.
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