European 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 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.” – according to the press release.

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 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.

„The €1.6 billion measure we have approved today will enable the creation of the Romanian Investment and Development Bank, which will boost investments in the country and ultimately support economic growth. The Bank will ensure access to finance, especially to those small and medium sized companies that struggle to get sufficient support from the market. This will strengthen the competitiveness and sustainability of companies operating in the EU, while at the same time ensuring that competition is not unduly distorted.” – Margrethe Vestager, Executive Vice-President in charge of competition policy