The European Commission has approved a Portuguese bank recapitalization scheme intended to bolster financing of the real economy, the commission announced on Wednesday.

"The scheme is in line with the Commission's guidance on support measures for credit institutions during the financial crisis," the commission said, adding that the measure is limited in time and scope.

The EU Competition Commissioner Neelie Kroes said that the Portuguese government's plan is effective.

"The Portuguese scheme provides effective means to strengthen confidence in the markets, while it at the same time establishes safeguards to limit distortions of competition," he said.

On November 5, 2008, the Portuguese authorities notified to the European Commission a recapitalization scheme of maximum 4 billion euros for credit institutions registered in Portugal.

Under the scheme, the Portuguese authorities may also take part in recapitalization provided that at least 30 percent of the capital is contributed by private investors and that the state capital is on equal terms with the private capital.

(Xinhua News Agency May 21, 2009)