Elisa Ferreira: It is not possible to create a vehicle to solve NPL

  • ECO News
  • 1 June 2017

European legislation makes it impossible to create a vehicle to solve the issue of non-performing loans, states the Bank of Portugal's administrator.

Elisa Ferreira states that currently there are no conditions to create a vehicle to solve the issue of non-performing loans. In an interview to RTP, the Bank of Portugal (BdP) administrator disclosed that 34% of the Euro Area countries’ wealth was used to finance and hold the banking together, and that institutions should free themselves of the NPL burden as much as the economy allows it. However, according to Elisa Ferreira, the lack of conditions exists because of “European legislation”.

“I think it is a critical issue for all of Europe. In this process, some countries cleaned up that NPL”, she stated, emphasizing that “drastic interventions” took place in banking of countries such as Ireland or the UK, where five banks were nationalized. “This does not mean the money used went down the drain”.

“It is no longer possible to remove the assets from the bank’s balance to be placed on the market [at market value]. The bank must have that capital in order to make up for that difference (…) precisely because the rule has changed“, she stated, adding that Portugal’s weakness is that it does not have “Italy’s means”, for example, “to put money back on the banks”.

In the interview, Elisa Ferreira also mentioned the Portuguese banking situation, underlining that “no bank is in a critical situation”. “Most of the problems have been manageable, and this does not mean we do not make recommendations or interventions”, she stated, adding that supervisors feel the Portuguese banking is “increasingly stabilizing”.