NPL management platform: private, voluntary and non-exclusive

  • ECO News
  • 9 June 2017

The Government and the Bank of Portugal discarded the 'bad bank' idea and, in return, presented a private and voluntary management platform to handle non-performing loans.

Non-performing loans in the Portuguese banking will not be purchased by a bad bank; yet, a platform may be created on the behalf of banks to manage NPLs. The main goal is to have a fast restructuring by sitting banks and companies together and understand which of their crossed loans are still viable. This is the proposal made by the Government and the Bank of Portugal; bankers are open to this path, ECO discovered.

The Portuguese PM has revealed that the Government presented a proposal to solve the NPL issue in the Portuguese banking to the three banks with more default loans — CGD, BCP and Novo Banco —, adding it is up to those financial institutions to analyse the solution presented by the Finance ministry and the Bank of Portugal.

Portuguese banking has in its balance 30 billion euros, but unlike what has been suggested, no bad bad bank or financial vehicle will be created: the Government and the Bank of Portugal, along with Unidade de Missão para a Capitalização das Empresas (Company’s Capitalization Unit), created a platform to manage NPL.

According to several sources contacted by ECO, it will be a private model (meaning, no state aid), voluntary (by creating incentives which attract banks) and non-exclusive of other alternatives which may come up in the future — even a bad bank within the European framework. In fact, as another source from banking told ECO, the solution was thought for banking, but it became a plan that has companies’ recovery as its main priority and that, through companies, will clear banks’ NPLs. “It may be a regeneration moment for the Portuguese economy”, a source from the Government told ECO.