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Costa prepares new laws to reorganise Portugal’s banking sector

The fact that Portugal’s private banks are one-by-one being snapped up by foreign concerns is “worrying” prime minister António Costa and prompting him to prepare new laws to reorganise “the whole sector”.

Perhaps the most intriguing aspect of this news is that it comes from Spanish newspaper El Pais, in conversation with Maria Cabanyes, the senior vice-president of Moody’s ratings agency.

According to Cabanyes, the “principal problem (in Portugal) is the number of problematic debts at stake”.

This isn’t simply a Portuguese problem, she and other experts agree, but a profound process of restructuring and consolidation is needed, and fast.

As económico explains, “on top of the problems with Novo Banco and Banif, the Portuguese State faces the necessity to increase capital in Caixa Geral de Depósitos this year against a scenario in which it lent 900 million euros and still hasn’t seen anything paid back”.

In fact, CGD has simply reported over two billion euros in losses for the last five years, “after having had to deal with five billion in non-performing / bad loans”.

Thus Cabanyes has told El Pais that Portuguese banks need “strengthening of capital”.

“They are in a weakened situation in comparison with their European counterparts”, she affirmed, although here banking regulators do not agree with this analysis, writes económico.

natasha.donn@algarveresident.com