The European Central Bank has announced that four Portuguese banks – Caixa Geral de Depósitos, Millennium bcp, Banco Espírito Santo and Banco BPI – will be subject to an asset quality review and a fresh stress test over the next year, as banking supervision passes from national central banks to the ECB.
A total of 124 banks around Europe will be reviewed and tested, based on the ECB’s definition of systemic importance.
Fernando Faria de Oliveira, president of the Portuguese Banking Association, said there was nothing to be feared from the process because Portuguese banks have been thoroughly and regularly analysed by outside experts as part of the Troika’s bailout assessments, and therefore no surprises are expected.
Prime Minister Pedro Passos Coelho, meanwhile, reminded that the state still has more than €6 billion in funds available to provide temporary capital support for the banking sector, though he stressed it was unlikely that would be necessary, given the strong capital levels of the Portuguese banks.
At the end of the week BES became the first bank to post third-quarter numbers, unveiling a €381 million loss. That was larger than expected and blamed on the continuing recessionary environment in Portugal and the need to continue to create provisions for bad loans.
BES also announced its parent company will float its Rio Forte holding, which included the Espírito Santo Group’s main non-financial assets, hoping to raise around €1 billion.