LISBON: The International Monetary Fund (IMF) said that eliminating the uncertainty about the future of Portuguese banks where the state owns capital, would help bolster the financial stability and improve the operating context of all the banks.
The fund said that removing this uncertainty would also “clarify the requirements for sovereign funding, with implications for the cost of funding for the state and for banks”. State-owned Caixa Geral de Depósitos (CGD), which lost €171.5 million last year, has been at the centre of a political and economic debate in recent weeks.
The recapitalisation requirement of the bank, which is considered fundamental, has seen the press bandying numbers of around €5 billion. However the actual amount has not yet been formally decided and negotiations are still going on between the government and the European Commission (EC). Then there is also the sale of Novo Banco, which has problematic assets from the extinct Banco Espírito Santo (BES), which was closed in August 2014 and which was capitalised with almost €5 billion, which still has to be finished.
The Bank of Portugal wants to close the sale of Novo Banco this summer even though the deadline for getting rid of it only ends in August 2017. If the bank cannot be sold, there is still the possibility on the table that it might be nationalised to give the bank time to restructure over a longer timeframe before putting it back on the market.
