Portugal’s banks seek to complete capital rounds

For all the capital they are raising, Portuguese banks are not out of the woods yet.

Banco Comercial Portugues, the country’s biggest publicly traded lender by assets, last week raised €1.3bn in capital, while state-owned lender Caixa Geral de Depositos is set to get the rest of its €5bn capital boost from March.

Meanwhile, Novo Banco, which emerged from the breakup of Banco Espirito Santo, still carries a ‘for sale’ sign more than two years after it was put on the block.

The fate of Portuguese banks are closely watched here as the Government mulls selling a stake in AIB, possibly as early as the summer.

Portugal’s banking sector remains wobbly almost three years after Portugal exited its international bailout plan. Credit at risk at Portuguese banks, which was €32bn at the end of 2015, has been stuck at about 12% of the total for the last two years.

That is after Portugal’s eight biggest banks raised more than €26bn in capital from 2008 through 2014, including state aid during the bailout and the rescue of Banco Espirito Santo, according to the central bank.

“We’re in a situation where we are still dealing with the same issues we had years ago regarding the clean-up of the banks’ balance sheets and writing down bad loans to correct levels,” said Benjie Creelan-Sandford, a bank analyst at Jefferies Group.

The banking sector’s woes have weighed on the country’s sovereign debt, with Portugal’s 10-year bond yield earlier this week touching the highest level in a year.

It hasn’t helped that prime minister Antonio Costa, has suggested he might nationalise Novo Banco if the sale terms are unfavourable.

The highly indebted government has also said it might take its cue from Italy’s bank rescue fund.



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