State aid: Commission approves €1.6 billion Romania measure to capitalise new investment and development bank

The European Commission has approved, under EU State aid rules, a €1.6 billion Romanian measure to set-up the Romanian Investment and Development Bank (‘the Bank'). The Bank aims at supporting economic and social development, competitiveness, innovation and growth across Romania's economy.

The Romanian measure

Romania notified to the Commission its plans to set-up of a national development bank with initial capital of up to €1.6 billion (RON 7.9 billion). The Bank will be established as a fully State-owned entity, with the Ministry of Finance as its shareholder, and will act under the supervision of the National Bank of Romania.

The aid will take the form of: (i) a capital injection of up to €608 million, out of which €10 million are estimated to be received in 2024 under the Recovery and Resilience Facility, (ii) a €1.4 million grant, and (iii) State guarantees worth €992 million.

The Bank will be entrusted with addressing market failures and supporting economic development and investment opportunities. It will intervene to ensure access to financing in areas where there is insufficient availability in the market, with a focus on providing funding to small and medium sized companies, including micro-enterprises and start-ups. The Bank may also support infrastructure projects aiming at improving productivity in the Romanian economy, as these projects usually require long-term financing that is difficult to secure on the market.

The Bank may also make use of financing provided under EU financial instruments, such as the InvestEU programme, by channelling that financing to eligible companies and projects. In this way, the Bank will support investments of strategic importance to the European Union.

The Commission's assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows State aid to facilitate the development of certain economic activities or of certain economic areas.

The Commission found that:

• The measure facilitates the development of certain economic activities in a variety of sectors that face difficulties in obtaining sufficient financing from the market.
• The measure is necessary and appropriate to improve access to finance for companies that have difficulties in obtaining sufficient finance from the market. The measure is also proportionate as the activities conducted by the Bank will effectively target market failures and the amount of funding granted will not exceed what is needed to achieve the intended objectives.
• The measure has sufficient safeguards to avoid undue negative effects on competition and trade in the EU. In particular, the Bank's financing activities will be subject to measures ensuring that private investors are not crowded out, should they be willing to provide financing to companies. Furthermore,, given that the scope of market failures may evolve, the Commission has approved the Bank's activities for a defined period, until the end of 2029. Any further prolongation would need to be notified to the Commission for approval.

On this basis, the Commission approved the measure under EU State aid rules.

Background

EU state aid rules allow Member States to grant aid to National Promotional Banks if they provide financing in areas where market failures lead to an undersupply of finance by private operators, or where the private market would not provide such financing on its own.

For more details, see the Commission's Communication of July 2015 on the role of National Promotional Banks in supporting the Investment Plan for Europe.

All investments and reforms entailing State aid, also those included in national resilience and recovery plans presented in the context of the RRF, must be notified to the Commission for prior approval, unless covered by one of the State aid block-exemption rules.

The Commission assesses measures forming part of the national recovery plans presented in the context of the RRF as a matter of priority and has provided guidance and support to Member States in the preparatory phases of the national plans, to facilitate the rapid deployment of the RRF. At the same time, the Commission makes sure in its decision that the applicable State aid rules are complied with, in order to preserve the level playing field in the Single Market and to ensure that the RRF funds are used in a way that minimises distortions of competition and does not crowd out private investments.

For more information

The non-confidential version of today's decision will be made available under the case number SA.104762 in the State aid register on the Commission's 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 Competition Weekly e-News.