Friday 28 October 2016

Portugal gets EC go-ahead for bank recapitalisation

Published 25/08/2016 | 02:30

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt. Photo: Reuters
Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt. Photo: Reuters

Portugal's Finance Ministry got approval from the European Commission to inject as much as €2.7bn into state-owned Caixa Geral, the country's biggest bank by assets.

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As part of the plan, the government will convert €960m of contingent convertible bonds subscribed by the state into shares of the Lisbon-based lender to bolster capital buffers, the Finance Ministry said in a statement yesterday.

Caixa Geral will also sell to private investors about €1bn of debt instruments that are eligible to meet capital ratios.

Elsewhere, political risk returned to haunt emerging markets, with investors selling assets in South Africa, Turkey and Korea. Shares in Europe rose for a third day while US stocks were little changed.

The Stoxx Europe 600 Index reversed earlier losses to rise 0.4pc by mid-afternoon after its biggest gain in more than two weeks.

Advertising firm WPP jumped 6pc after the company said profit rose 15pc in the six months ended June 30 as a favourable currency translation more than offset Brexit's drag on the British economy.

Oil extended its decline after a government report showed that US crude stockpiles unexpectedly rose last week.

"We're still in a fundamentally oversupplied market," said Adam Wise, who helps run a $7bn oil and natural gas bond and private equity portfolio in Boston.

"The build was unexpected and comes amid a lot of OPEC chatter making for a sloppy, if range-bound market."

London's FTSE 100 index was down almost half a percentage point at mid-afternoon at 6835.

The German DAX was up 0.2pc and the French CAC had gained 0.3pc.

Dublin's ISEQ overall index of Irish shares was down slightly at 6102.44, having lost 0.18pc, or 11.16 points, by mid-afternoon yesterday.

Mining stocks yesterday afternoon rebounded somewhat, with gains for Aminex, Ormonde Mining and CPL Resources.

Financial services provider IFG group had the most impressive performance of the afternoon, with gains of 4.7pc. Bank of Ireland shares were up 3.2pc, Smurfit Kappa had risen by 2.1pc, while Applegreen stocks were up by 11.pc.

Shares in Paddy Power Betfair fell by 2.1pc after it emerged that the Irish betting chain's co-founder, Stewart Kenny, was to step down from the board.

Beverage group C&C's stocks were down 1.7pc.

On currency markets, the euro was down against the greenback, trading at $ 1.12, and was worth 84 pence sterling.

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