Portuguese banks more reliant on ECB funds
Portuguese lender’s borrowings from an emergency European Central Bank program jumped 23 percent in April as the country sought a European Union bailout, the Bank of Portugal said. ECB funding increased to 48 billion euros ($79 billion) from 39 billion in March, the fourth rise in five months, the Lisbon-based Bank of Portugal said on its website yesterday. The figure is still less than August’s 49.1-billioneuro peak. Portugal last week became the third euro-area country after Greece and Ireland to receive a bailout. The country will receive 78 billion euros under the deal with the International Monetary Fund, the ECB and the EU. ECB President Jean- Claude Trichet told reporters on April 7 the European Central Bank “encouraged” Portugal to seek the rescue, adding that the country’s banks needed to reduce their reliance on ECB funding. Portuguese banks have been relying on financing from the European Central Bank as the government’s struggle with its deficit restricted their ability to borrow money from the interbank lending market. Portugal’s banks will get about 12 billion euros in the rescue package. Banco Espirito Santo SA’s chief executive officer, Ricardo Salgado, said last week the lender’s reliance on ECB financing increased in the first quarter. The Portuguese lender said this week that it agreed to sell a stake in Brazil’s Banco Bradesco SA to bolster capital. Banco Comercial Portugues SA reduced its ECB borrowings to 14.7 billion euros at the end of March from 14.9 billion euros at the end of December, CEO Carlos Santos Ferreira said last month.
(Bloomberg) pace of reforms,” he added. In March, the European Union and the IMF decided to grant Romania a fresh credit line of 5 billion euros ($6.8 billion dollars) to be drawn only in case of emergency. Franks stressed that the performance criteria and targets set under the new deal had been met. “Current indicators show that Romania will not have to draw” on the credit line, he said. IMF and EU forecasts show that after two years of severe recession, the Balkan country will see its economy grow by 1.5 percent in 2011, and by 3.75 to 4.0 percent in 2012. But Franks added that higher growth depended on accelerating structural reforms, including in stateowned enterprises. Romania has pledged to restructure loss-making state-owned companies, whose overall arrears account for 4.0 to 5.0 percent of gross domestic product. “It is critical that the state-owned enterprises become an engine of growth instead of a drag on the economy,” Franks stressed.