Portuguese banks have until 2046 to pay the Resolution Fund

  • ECO News
  • 22 March 2017

Banks will have more time to pay off the loans granted by the Portuguese State to the Resolution Fund for the injection of money in Novo Banco and Banif.

The Finance Minister extended the maturities on the loans granted by the Portuguese State to the Resolution Fund to December 2046, disclosed this Tuesday Mário Centeno’s ministry, in a press release. This change aims to assure the effort of the contributions demanded to banks remains at its “current level”, the Government explains.

“The loan revision allows for the assurance of the full payment of the Resolution Fund’s responsibilities, as well as the corresponding remuneration, without having to resort to special contributions or any other type of extraordinary contributions from the banking sector”, the Minister of Finance explains.

This means that banks will have to pay the Resolution Fund through ordinary contributions and through the contribution on the banking sector.

Mário Centeno’s office mentions this extension of the loans’ maturities does not change the banking sector’s responsibilities towards the Resolution Fund; it is, in addition, a way of “reducing uncertainty” for the banking, “of assuring the financial stability”, and of “favoring the reinforcement of the capitalization of Portuguese banks” and also “the competitiveness of the Portuguese economy”.

The Government assures the revision of those contract terms “was made in agreement with the European Commission”.

"The revision of the contract terms was made in agreement with the European Commission and it allows to reduce uncertainty concerning the annual responsibilities of banks in the future, regardless of the contingencies that may be presented to the Resolution Fund.”

Finance ministry

The Finance ministry explains that the interest rates applicable to the State’s loans to the Resolution Fund “were based on the financing cost of the Portuguese Republic, plus a commission”, and assures it will be “periodically updated”. That update will be compatible with the “indexing to be considered”, but also “allowing for the maintenance of the Resolution Fund’s solvency conditions”.

According to the Executive, the State already received from the Resolution Fund 270 million euros in interests and 136 million euros in partial early repayment of one of the State’s loans.

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