Portuguese PM states NPL will not create “a bad bank”

  • ECO News
  • 5 April 2017

António Costa believes the solution to handle Portuguese NPLs is capital appreciation. As for Montepio, the PM said he is "confident" about the assets under the Ministry of Labor's responsibility.

The issue of non-performing loans in the Portuguese banking will not become a “bad bank”, assured this Tuesday the Portuguese prime minister António Costa in an interview to the Portuguese radio station Renascença. What Portugal needs, the PM stated, is to have an institution capable of recovering and valuing those assets, instead of treating them like junk.

During the interview, when asked about the non-performing loans’ issue, António Costa explicitly answered: “A bad bank will not be created”, which is something he says to have never advocated for. He criticized the previous Government, saying they postponed the financial system’s issues to later be solved, after their “clean exit”.

Concerning banking, Costa took a chance to compliment his own Government for the management of past situations such as CGD, which is currently being recapitalized, BPI, Banif, BCP and Novo Banco. He devoted special attention to the latter, saying that the solution found was “the only possible one”, more so because “if the bank was not sold until August, it would be liquidated”. The PM emphasizes it is not his favorite solution, but “the buyer wanted the State to be involved, since it increases both the bank and solution’s credibility; through the Resolution Fund, the State can benefit from a possible valuation”, limiting its losses’ risk.

“We are not living in Alice’s Wonderland. A year ago, we were in a very serious situation. Throughout this year, we have been improving“, the prime minister summarized.

When asked about Montepio, António Costa stated: “Concerning the products supervised by the Ministry of Labor, yes, I am confident about the expertise of the minister Vieira da Silva“. He avoided answering questions concerning Tomás Correia’s repute, since his honourability “is not of the Government’s concern”, but of the Bank of Portugal.

The Portuguese PM believe the crisis Montepio is going through is “a quite accurate and limited problem in the financial system, in comparison to other problems which have been successfully solved”, he stated, rejecting any “unnecessary alarmism” surrounding the issue.