The European Commission has temporarily approved of a €1.1 billion recapitalisation grant to Portuguese bank Banco Internacional do Funchal S.A. (Banif), as permitted under EU state rules regarding aid for financial stability. 
It’s planned that the grant will allow the bank to meet regulatory capital ratios that have been set by Portugal’s banking regulators, and will be handled by the Directorate General of Competition, as state aid rules fall outside the €78 billion Economic Adjustment Programme agreed for Portugal in 2011 to ensure its financial stability. 
As part of the deal Portugal have also agreed to a far reaching restructuring plan for Banif that is to be completed by the 31 March,  the Commission will then take a look at the proposals of the restructuring and make a full assessment of them. 
An EU Official said: “As Commissioner Almunia indicated, the Commission expects Banif, following the recapitalisation, to present an in-depth restructuring plan by 31 March 2013, that is supposed to include a significant downsizing of the bank with a focus on Madeira and the Azores aimed at mitigating distortions of competition in view of the amount of aid, as well as establishing long term viability.”
Two weeks ago Portugal notified the recapitalisation measures, that included €700 million worth of shares to be issued by Banif, and a further €400 million in hybrid securities to meet capital requirements. 
“We have already been devising a restructuring plan for the last six months, and have been negotiating terms with the Portuguese government.” Explained a spokesperson for Banif.  “Of course we have been doing some internal restructuring in order to receive public funds, the group was led by a holding company and recapitalisation can only occur in purely a bank, so had to merger the holding company with the bank to ensure further public investment.” 
He added: “We are still working on the final details of the restructuring plan in many areas but this will be completed by the 31 March deadline. We are in constant discussion with the government over our plans to create a clear and stable pathway for the group in the future. Negotiations are also ongoing on some parts of the terms to receive the funding, and we expect to finalise these terms for this to happen very soon.” 
After the financial crash of 2008 the Commission adopted special state rules that allowed all member states to support their own banking systems, to ensures financial stability as long as competition is not distorted. 
So far the crises rules are thought to be a success by the Commission as its has forced banks to restructure in order to change their business models to achieve long term viability, especially if banks and financial institutions have been reliant on risky investments. 
From 1 January last year the Commission adopted a communication on state aid rules to support banks, that kept in place the four previous communications which set in place  support in the form of funding guarantees, recapitalisation and asset relief, and the requirements for a restructuring or viability plan. 
Crises rules were also updated at the end of 2011 to assess public support to financial institutions in troubled times, with the main stipulations explaining how the state is remunerated if member states decide to recapitalise their banks using such instruments as ordinary shares, where the there are no fixed dividends in place. 
Banif is the eighth largest commercial bank in Portugal when measured by assets, where it was estimated at the end of 2011 that those assets combined totalled €15.8 billion.