Banco Português de Fomento

Banco Português de Fomento (BPF), also known as Banco de Fomento, is a Portuguese state-owned investment and development bank established in 2020 and headquartered in Porto. The institution is organized as a group comprising some other entities, such as the state-run venture capital investing arm Portugal Ventures, beyond the development bank proper. The larger group is called Grupo Banco Português de Fomento.

History

Pedro Passos Coelho, Prime Minister of Portugal in the XIX and XX Constitutional Governments of Portugal.

The idea of a Portuguese Republic's development bank was born in 2012. The creation of the development bank was defined as a priority by Prime Minister Pedro Passos Coelho in the parliamentary debate that began the activities of the remodeled XIX Constitutional Government of Portugal's cabinet on July 24, 2013, an installation commission was soon created that allowed the Council of Ministers, in October 2014, to formalize the creation of the Financial Development Institution (IFD - Instituição Financeira de Desenvolvimento). There were discussions with the representatives of the European troika that made the approval of the 12th and last evaluation of the assistance program to Portugal in May 2014, dependent on limiting the scope and capital of the institution that was set, in this first phase, at 100 million euros. The troika and the European Commission feared that a new, larger public bank in Portugal would be used to distort competition and would eventually give rise to significant undue and bad loans to companies. Although formally created in October 2014, the Development Financial Institution would only obtain a license from the Bank of Portugal to operate on June 29, 2015, two years after it was announced as a political priority to combat market failures and allow the creation of instruments, including the multiplying reuse of European Union funds, the operationalization of lines of support for investment and capitalization funds, among others, to boost the economy, especially in times of crisis.

KfW Westarkade, the central office of KfW in Frankfurt, Germany.

In the final months of the XX Constitutional Government of Portugal, it was still possible to launch the first line of capitalization for companies and to formalize cooperation agreements with Spanish (ICO), French (Bpifrance) and German (KfW) state-owned development banks to launch lines of credit to support investment. There was also the intention to reuse, with a multiplying effect, 1600 million euros of European Union funds of a reversible nature. An operational consolidation process was initiated with the appointment of cross-administrators between the institutions intended to be merged into the IFD, namely between SPGM - Sociedade de Investimento and the IFD itself. The European Commission was also requested to approve the merger of the IFD with PME Investimento, Portugal Ventures, SOFID and Sociedade Portuguesa de Garantia Mutua (SPGM) in order to provide the institution with greater firepower and rationality as well as a larger reach and scope, a process that was expected to be completed in early 2017. This merger aimed to concentrate in a single institution the instruments to support credit to companies (scattered in IFD, PMEI and SPGM), and the capitalization instruments (IFD, PMEI and Portugal Ventures), in addition to instruments to support internationalization (Sofid) with the integration also in IFD credit guarantees. This was the final "status" of the so-called Banco de Fomento at the conclusion of the XXth legislature (2011-2015). From 2016 to 2019 the IFD seems to have disappeared from the political and economic priorities. There was a lack of understanding of the project by the XXI Constitutional Government of Portugal and its Ministry of Economy. At that time, there were public discussions about the essence of the institution, as well as changes in the administration, which came to function with a very limited number of administrators and minimum services. Critics argue that if the understanding and action were any other, Portugal would probably be in the COVID-19 unexpected crisis, in a position to have a public institution properly designed to support the Portuguese economy and companies in capitalization processes, take advantage of investment financing lines (for example from the European Investment Bank) and credit insurance.

Instituto de Crédito Oficial (ICO) headquarters in Madrid, Spain.

In neighboring Spain, the Instituto de Crédito Oficial (ICO) played in these areas a great role in supporting companies, essential to the economic recovery during crises like those provoked by the COVID-19 pandemic.

The XXII Constitutional Government of Portugal Program proposed the development of a new financial institution, with the purpose of giving financial capacity to the national business ecosystem and accelerating the various existing funding sources dedicated to investing in sustainable, carbon neutral and circular economy projects. The intention to mobilize the most appropriate financial instruments to promote a green economy, in line with the European guidelines for sustainable financing, was also noteworthy. In June 2020, the Economic and Social Stabilization Program, approved by the Government as part of the response to the difficult economic context caused by the COVID-19 pandemic, considered it essential to accelerate the process of creating an institution that would assert itself as a promotional bank for development and that would allow synergies to be exploited through greater articulation and integration of support for investment, innovation and internationalization of the economy. Thus, on November 3, 2020, Banco Português de Fomento, S.A. was born, an institution that results from the merger, by incorporation, of PME Investimentos - Sociedade de Investimento S.A., and IFD - Instituição Financeira de Desenvolvimento S.A., into SPGM - Sociedade de Investimento S.A., as described in Decree-Law no. 63/2020 of September 7. A unique institution that creates innovative solutions to support national and international projects, promoting sustainability and economic development.

BPF Group

The Grupo Banco Português de Fomento (BPF Group) includes besides the development bank proper, a number of other institutions and departments.

Venture Capital

• Portugal Ventures: Portugal Ventures is a state-owned seed funding, venture capital and private equity organization founded in 2012 by the XIX Constitutional Government of Portugal to enhance the internationalization of Portuguese innovative startup companies, helping them achieve competitiveness goals in all stages of development and create global brands.

Tourism Fund

• Turismo Fundos: Turismo Fundos, a state-owned fund manager, invests especially in real estate for tourism and industrial activities.

Mutual Guarantee

• Agrogarante: Agrogarante is one of the four Mutual Guarantee Companies (SGM) existing in the country, participated by the Portuguese State, as well as by the main national banking groups (Banco Português de Investimento, Novo Banco, Millennium BCP, Caixa Geral de Depósitos, Caixa de Crédito Agrícola, Banco Santander Totta and Montepio Geral), acting with SMEs through the provision of guarantees for the sectors of agriculture, agro-industries and forestry.
• Garval: Garval is a state-run mutual guarantee provider and credit facilitator for SMEs of the central part of mainland Portugal plus the Azores archipelago.
• Lisgarante: Lisgarante is a state-run mutual guarantee provider and credit facilitator for SMEs of the southern part of mainland Portugal plus the Madeira archipelago.
• Norgarante: Norgarante is a state-run mutual guarantee provider and credit facilitator for SMEs of the northern part of mainland Portugal.

External links

• Official website

References

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