The EC approves the establishment of the Romanian Investment and Development Bank, with an initial capital of 1.6 billion euros

By RBJ
The European Commission has approved, based on the EU rules on state aid, a measure adopted by Romania, in the amount of 1.6 billion euros, for the establishment of the Romanian Investment and Development Bank, according to a press release from the Community Executive, given publicity on Tuesday.
The bank aims to support economic and social development, competitiveness, innovation and economic growth in the entire economy of Romania.
Romania notified the Commission of its plans to establish a national development bank with an initial capital of up to 1.6 billion euros (7.9 billion lei). The bank will be established as an entity fully owned by the state, with the Ministry of Finance as a shareholder; it will carry out its activity under the supervision of the National Bank of Romania.
The aid is granted in the form of a capital injection of up to 608 million euros, of which it is estimated that 10 million euros will be received in 2024 under the Recovery and Resilience Mechanism (RMR), a grant worth 1.4 million euros and state guarantees worth 992 million euros.
The bank will have the task of fixing market dysfunctions and supporting economic development and investment opportunities. It will intervene to ensure access to financing in areas where there is insufficient availability on the market, focusing on the provision of financing to small and medium-sized enterprises, including micro-enterprises and start-ups. The bank can also support infrastructure projects aimed 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 can also draw on funding provided under EU financial instruments, such as the InvestEU program, channeling that funding to eligible businesses and projects. Thus, the bank will support investments of strategic importance for the European Union.
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 certain regions economic.
The Commission found that the measure facilitates the development of certain economic activities in a variety of sectors that face difficulties in obtaining a sufficient level of financing from the market and that the measure is necessary and appropriate to improve access to financing for enterprises that experience difficulties in obtaining a sufficient level of financing from the market. The measure is also proportional, because the activities carried out by the bank will effectively target market dysfunctions, and the amount of financing received is proportional to the achievement of the targeted objectives.
In addition, the measure has sufficient safeguards to avoid unjustified negative effects on competition and trade in the EU. In particular, the bank’s financing activities will be subject to measures to ensure that private investors are not excluded, if they are willing to provide financing to businesses. Moreover, given that the scope of market dysfunctions may evolve, the Commission has approved the bank’s activities for a specific period, namely until the end of 2029. Any further extension will have to be notified to the Commission for approval.
Given these considerations, the Commission approved the measure under EU state aid rules.
EU rules on state aid allow member states to grant aid to national promotional banks if they provide financing in areas where market dysfunctions result in a weak offer of financing from private operators or in areas where the private market would not provide a such self-financing.
All investments and reforms that involve state aid, including those included in the national resilience and recovery plans presented in the context of the MRR, must be notified to the Commission for prior approval, unless they are subject to one of the category exemption rules for state aid state.
The Commission evaluates with priority the measures that are part of the national recovery plans presented in the context of the MRR and has provided guidance and support to the Member States in the preparatory stages of the national plans, in order to facilitate the rapid implementation of the MRR.