HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 192/12
EN
Official Journal of the European Union
20.7.2012
COUNCIL IMPLEMENTING DECISION
of 10 July 2012
amending Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal
(2012/409/EU)
THE COUNCIL OF THE EUROPEAN UNION,
system is on target to ensure by June 2012 a minimum
Core Tier 1 capital ratio of 9 %, including the European
Having regard to the Treaty on the Functioning of the European
Banking Authority requirements and the capital needs
Union,
related to the partial transfer of pension funds and
special on-site inspections. The early intervention,
resolution and deposit insurance framework has been
Having regard to Council Regulation (EU) No 407/2010 of
strengthened and the Portuguese authorities are asked
11 May 2010 establishing a European financial stabilisation
to prepare the implementing measures. Product market
mechanism ( 1 ), and in particular Article 3(2) thereof,
reforms, in particular in sheltered services, are essential to
restore competitiveness and promote growth and
Having regard to the proposal from the European Commission,
employment. The Portuguese government is imple
menting a strategy to restructure state-owned enterprises
(SOEs) to reduce their indebtedness and to insure
Whereas:
improved conditions for market financing. A study to
assess the costs and benefits of renegotiating any
(1) In
line
with
Article
3(9)
of
Council
Implementing
public-private partnerships (PPPs) or concession
Decision 2011/344/EU ( 2 ), the Commission, together
contracts to reduce the government financial obligations
with the International Monetary Fund (IMF) and in
is being prepared by an international auditing firm. The
liaison with the European Central Bank (ECB), has
Portuguese government is committed to ensuring an
conducted the fourth review of the Portuguese auth
effective competition enforcement regime. Housing
orities’ progress on the implementation of the agreed
market regulations are being modernised with a view
measures under the economic and financial adjustment
to promoting geographical mobility and the reform of
programme (Programme) as well as of their effectiveness
the judicial system is making good progress. The privati
and economic and social impact.
sation programme is being implemented under the new
framework law.
(2) The
review
has
found
that
Portugal’s
compliance
with
the
conditionality for the first quarter of 2012 was satis
(3) In
the
light
of
these
developments,
Implementing
factory. In 2011, the general government deficit was
Decision 2011/344/EU should be amended,
4,2 % of GDP. The fiscal target for 2012 of 4,5 % of
GDP remains within reach. The rebalancing of the
HAS ADOPTED THIS DECISION:
economy has continued at a swift pace and exports
have outperformed expectations and more than offset
Article 1
weaker domestic demand. However, risks to the fiscal
objectives related to the rebalancing of the macro
Article 3 of Implementing Decision 2011/344/EU is hereby
economic outlook have started to materialise, with the
amended as follows:
growth composition tilting more strongly towards net
exports and away from domestic demand and in view
(1) paragraph 6 is amended as follows:
of the substantial worsening of the labour market situ
ation. Progress has been made with reforms to raise the
(a) point (a) is replaced by the following:
long-term growth potential of the economy. Reform of
the labour market aimed at removing rigidities and
‘(a) The general government deficit shall not exceed
improving productivity has already been legislated for
4,5 % of GDP in 2012. Portugal shall continue to
and need to be sustained. Severance payments should
closely monitor fiscal developments and assess
be aligned with the Union average and a fund to
whether further policy adjustments are necessary
finance part of severance payments should be created.
to achieve the 2012 target;’;
A proposal to revise the mechanism for extending
collective agreements is under preparation. Policy
(b) points (d), (e) and (f) are replaced by the following:
efforts to support financial system stability continue.
The sale of Banco Português de Negócios (BPN) has
‘(d) Portugal shall continue adopting measures to
been concluded and the management of the special
reinforce public finance management. Portugal
purpose vehicles should be optimised to maximise the
shall implement the measures provided for in the
recovery of the assets transferred from BPN.
new Budgetary Framework Law, including setting
up a medium-term budgetary framework. The
The deleveraging of the financial sector is evolving in an
local and regional budgetary frameworks shall be
orderly fashion. The recapitalisation of the banking
considerably strengthened, in particular by
aligning the respective financing laws with the
( 1 ) OJ L 118, 12.5.2010, p. 1.
requirements of the Budgetary Framework Law.
( 2 ) OJ L 159, 17.6.2011, p. 88.
Portugal shall step up the reporting and monitoring

---

EN
20.7.2012 Official
Journal
of
the
European
Union L
192/13
of public finances and reinforce budgetary
(f) point (l) is deleted;
execution rules and procedures. The Portuguese
Government shall reinforce the implementation of
the strategy for the validation and settlement of
(g) point (o) is replaced by the following:
arrears. That strategy lays out the prioritisation
criteria for paying creditors, as well as governance
arrangements to ensure a fair and transparent
‘(o) Portugal shall implement the measures set out in its
settling process across all sectors. Portugal shall
action plan to improve the quality of secondary and
implement the new legal and institutional PPPs
vocational education and training;’;
framework. Based on the results of a study on
PPPs renegotiations, the Portuguese government
shall renegotiate the relevant contracts. Portugal
(h) points (p) and (r) are replaced by the following:
shall adopt a law to regulate the creation and the
functioning of SOEs at the central, regional and
‘(p) The functioning of the judicial system shall be
local levels;
improved by implementing the measures proposed
under the Judicial Reform Map and by applying
(e) Portugal shall reorganise and significantly reduce
targeted measures to progressively eliminate the
the number of local government entities. These
court backlog and to foster alternative dispute
changes shall come into effect by the beginning
resolution;
of the next local election cycle;
(r) The competition and regulatory framework shall be
(f) Portugal
shall
modernise
the
revenue
administration
improved. Portugal shall reinforce the independence
by completing the implementation of the
and resources of the main national regulatory auth
Autoridade Tributária e Aduaneira, reinforcing the
orities; implement the Competition Law with a view
links with the revenue collection units of the Social
to improving the speed and effectiveness of the
Security, reducing the number of municipal offices
enforcement of competition rules; and monitor
and addressing remaining bottlenecks in the tax
the inflow of new cases and report on the func
appeal system;’;
tioning of the specialised court for competition,
regulation and supervision;’;
(c) points (h) and (i) are replaced by the following:
(i) points (u) and (v) are deleted;
‘(h) Portugal shall adopt measures to improve the effi
ciency and sustainability of SOEs at central, regional
(2) paragraph 8 is replaced by the following:
and local level. Portugal shall implement a strategy
to restructure and reduce the indebtedness of SOEs,
including Parpública, and to ensure improved
‘8. With
a
view
to
restoring
confidence
in
the
financial
conditions for market financing. Portugal shall
sector, Portugal shall adequately recapitalise its banking
implement this strategy to reach operational
sector and ensure an orderly deleveraging process. In that
balance at sector level by the end of 2012;
regard, Portugal shall implement the strategy for the
Portuguese banking sector agreed with the Commission,
the ECB and the IMF so that financial stability is preserved.
(i) Portugal shall continue implementing the privati
In particular, Portugal shall:
sation programme. The direct sale of the Caixa
Geral de Depósitos (CGD) insurance arm, Caixa
Seguros, shall take place in 2012. The privatisation
(a) advise banks to strengthen their collateral buffers on a
process of the national air carrier TAP, of the
sustainable basis and monitor the issuance of the
airport operator ANA — Aeroportos de Portugal,
government guaranteed bank bonds, which has been
of the freight branch of CP — Comboios de
authorised up to EUR 35 billion in line with Union
Portugal, CP Carga, and of CTT — Correios de
State aid rules;
Portugal shall start in 2012 with a view of finalising
it in 2013;’;
(b) ensure that banks reach the Programme target of the
Core Tier 1 ratio of 10 % at the latest by the end of
(d) point (j) is deleted;
2012. The capital requirements stemming from valuing
sovereign debt based on market prices according to the
Union wide recapitalisation exercise coordinated by the
(e) point (k) is replaced by the following:
European Banking Authority shall be met in June 2012
together with the capital implications resulting from the
special on-site inspections programme and the transfer
‘(k) The Portuguese Government shall submit draft
of the banks’ pension funds to the State social security
legislation to the Portuguese Parliament to align
system. If banks cannot reach the capital requirement
severance payments with the Union average of 8-
thresholds within the deadlines set, the EUR 12 billion
12 days per year of work and to create a compen
bank solvency support facility established under the
sation fund for severance payments;’;
Programme shall be made available;

---

L 192/14
EN
Official Journal of the European Union
20.7.2012
(c) ensure a balanced and orderly deleveraging of the
(f) complete a proposal for encouraging the diversification
banking sector, which remains critical to eliminating
of financing alternatives to the corporate sector by the
funding imbalances on a permanent basis. Banks’
end of July 2012;
funding plans aim at reducing the loan-to-deposit
ratio to an indicative value of around 120 % by the
(g) implement measures to conclude the setting-up of the
end of the Programme and potentially reducing the
Resolution Fund with a view to ensuring that it is fully
reliance on Eurosystem funding for the duration of
operational by July 2012; adopt the supervisory notices
the Programme. Those funding plans shall be reviewed
on recovery plans by the end of July 2012; adopt the
quarterly;
regulation on resolution plans by the end of October
2012; and adopt the rules applicable to the setting-up
and operation of bridge banks in line with Union
(d) ensure that the state-owned CGD is streamlined to
competition rules by the end of September 2012.
increase the capital base of its core banking arm as
Priority shall be given to the review of the recovery
needed. The sale of its insurance and health arms shall
and subsequent resolution plans of the banks that are
take place before the end of 2012, while the sale of
of systemic importance;
non-strategic equity stakes is ongoing. In so far as these
needs cannot be met from internal group sources by the
(h) establish a framework for financial institutions to
end of June 2012, CGD shall be provided with
engage in out-of-court debt restructuring for households
government capital support from cash buffers outside
and SMEs.’.
the bank solvency support facility;
Article 2
This Decision is addressed to the Portuguese Republic.
(e) optimise the process for recovering the assets trans
ferred from BPN to the three state-owned special
purpose vehicles through the outsourcing to a profes
sional third party of the management of the assets, with
Done at Brussels, 10 July 2012.
a mandate to gradually recover the assets over time. The
Portuguese government shall select the party managing
For the Council
the assets through a competitive bidding process and
include proper incentives to optimise the recoveries
The President
into the mandate;
V. SHIARLY

---

Document Outline

• �

---