Por­tuguese banks more re­liant on ECB funds

Kathimerini English - - Business & Finance -

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.

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