The State Secretary for Parliamentary Affairs states the Government and the Bank of Portugal are studying a solution for NPL. It all indicates it will be a solution which comprehends all banks.
In an interview to ECO, the State Secretary for Parliamentary Affairs Pedro Nuno Santos believes the Portuguese financial system has improved since last year, although there are still some difficulties, namely concerning the large amount of non-performing loans (NPL) — “in fact, in their last report, OECD identifies it [NPL] as one of the largest problems Portugal must face“, says the State Secretary.
There are several solutions being studied and thought about [to solve the issue of non-performing loans], along with the Bank of Portugal and the Government. We hope that, in short term, we can provide an answer to this problem which is a constraint to granting credit, to our banking system, to our companies.
Although OECD recommends creating a ‘bad bank’, the government is considering, along with the Bank of Portugal, several alternatives to this problem, which had been identified long before the OECD report. Pedro Nuno Santos states: “We hope that, in short term, we can provide an answer to this problem which is a constraint to granting credit, to our banking system, to our companies […] to investment and to the development of our economy”.
The OECD believes in dealing with the NPL problem at one go, but the State Secretary believes the best solution will be systemic and integrated, in spite of highlighting “it is not the type of subject we would want to speculate about”.
Finally, Pedro Nuno Santos explains there are several constraints to economic growth, such as the “difficulty in accessing credit” and the “high level of indebtedness of Portuguese companies”, adding that if the weight of NPL in the bank’s balances decreases, they will be more capable of “lending”.