State to earn over 15 million a year

PORTUGUESE BANKS using state guarantees to re-float their liquidity levels will have to pay at least 15 million euros a year in interest for the privilege.

Financial conditions negotiated between the Finance Ministry, Bank of Portugal and at least three major banks including Caixa Geral de Depósitos (CGD), Banco Espírito Santo (BES) and Banco Privado Português (BPP) could end up being a nice little earner for the state.

BES, the bank run by Ricardo Salgado, has been given a tax rate on its borrowing of 0.948 per cent per annum for a 1.5 billion euro loan over three years, paying a total interest of 14.2 million euros a year for the guarantee.

The money has been borrowed by BES to enable it to fund its business activities for loans to small and medium-sized businesses in 2009 as well as keeping its liquidity levels up.

The Finance Minister, Fernando Teixeira dos Santos, has justified the loans to the banking sector as essential in maintaining stability in the country’s financial sector and economy as a whole.

BPP has already been given a 450 million life raft which can be renewed on a six monthly basis up until a maximum period of two years at 0.2 per cent, earning the state 900,000 euros while state-run CGD will have access to up to two billion euros over three years to lend to other banks and its own clients.

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