Faria de Oliveira: banks may need capital in the medium term

  • ECO News
  • 20 September 2017

The president of the Portuguese Banking Association (APB) says banking will need to make capital increases. These reinforcements will help accelerate the process of reducing the amount of NPL.

The Portuguese banking will need new capital increases. Not on the short run, but on a medium term, Faria de Oliveira tells ECO in the Investor Relations & Governance Awards (IRGA) in Lisbon, promoted by Deloitte. The president of APB (Portuguese Banking Association) stated these reinforcements will help accelerate the process of reducing the amount of non-performing loans (NPL), which still weight in on bank’s profitability, but will also help answering the capital requirements imposed by regulators. As for the platform created to solve the NPL issue, Faria de Oliveira, the representative from Portuguese financial institutions, stated the announcement of the solution “will soon be made”.

“The banking system will need to perform capital increases from time to time. Not in the short run, but on a medium term”, states Faria de Oliveira. “Capital increases will allow banks to accelerate a solution for NPL”, APB’s president states, although he acknowledges the bank’s efforts to reduce the weight of these types of loans.

The banking system will need to perform capital increases from time to time. Not in the short run, but on a medium term.

Fernando Faria de Oliveira

APB president

These capital reinforcements will also help institutions “to answer other requisites the supervision and regulation impose”, he adds. Therefore, it is necessary to “issue new bonds, and the fact that the rating improved will surely help in that sense”, he stated.

Faria de Oliveira considers this increase in Portugal’s rating by Standard & Poor’s — which took Portugal from the junk level — will “surely” help the Portuguese banking attract capital. This improvement is, “without a doubt, extremely important for the country and the banking system, as well as for all economy in general. It was very important that this revision occurred as soon as possible”, stated APB’s president, although he highlights the increase “took long enough”.

On the platform designed to solve the NPL problem in banks’ balance, the president of APB only stated it shouldn’t take long. “We know the announcement of the solution is coming very soon”, he tells ECO. “There is a certain expectation that this platform could, on the one hand, accelerate the viability of highly indebted companies”, Faria de Oliveira states, but adds that on the other hand, “it could allow those credits to be returned more quickly”.

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