Sunday 24 September 2017

Portuguese pump €6.6bn into three biggest banks

Portugal's Finance Minister Vitor Gaspar. Photo: Reuters
Portugal's Finance Minister Vitor Gaspar. Photo: Reuters

Joao Lima

THE Portuguese government will inject €6.6bn into three of the country's largest banks, becoming the latest eurozone country to tap international bailout funding for an undercapitalised financial sector.

Vítor Gaspar, Portuguese finance minister, said the funds would ensure that Banco Commercial Portugues, Banco BPI and state-owned Caixa Geral de Depósitos met tough new capital requirements set by the European Banking Authority.

"Each of the banks will surpass the European Banking Authority's capital requirements," the ministry said.

Portugal's €78bn EU-International Monetary Fund rescue programme, which was agreed last year, earmarked €12bn for aiding its banks.

About €5bn of the funds for the three banks will come from the bailout. Under the bailout's terms, Portuguese lenders were required to have a 9pc core tier 1 ratio at the end of last year and maintain that level through June after government bond holdings are written down to market prices. They must boost the ratio to 10pc by the end of 2012.

Banco Comercial shares were unchanged at ten cents giving the lender a market value of e721m. The Portuguese state will underwrite Banco Comercial's planned e500m capital increase at a price of 4 cents a share, the Finance Ministry said.

BPI advanced 5.5pc to 40.1 cents, giving the bank a market value of e397m. Oporto-based BPI said it approved a recapitalisation plan that totals e1.5bn.

Lender

The lender will sell e200m of stock by September 30, with shareholders having a right of preference. It will issue e1.3bn of contingent convertible bonds that will be subscribed by the Portuguese state.

On April 20, BPI Chief Executive Officer Fernando Ulrich said its capital needs may "probably" be between e1bn and e1.4bn.

On May 7, Banco Comercial Chief Financial Officer Miguel Braganca said Portugal's second-biggest bank by market value needed about e2.5bn in capital by the end of June to reach the target set by EU regulators.

Caixa Geral de Depositos yesterday said it would strengthen its capital by e1.65bn by the end of June.

The bank still has to define what part of that amount will be obtained through shares and what part through contingent convertible bonds.

The banks' plans were announced as Portugal yesterday announced the completion of the fourth quarterly review of its bailout programme.

The government now estimates debt will peak at 118.6pc of gross domestic product in 2013 after it lowered its economic growth forecast for next year to 0.2pc, Finance Minister Vitor Gaspar said yesterday.

Irish Independent

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