Fitch says end of moratoriums is ‘elephant in the room’ for Portuguese banks

  • ECO News
  • 15 October 2021

The US agency also doubts that the public guarantee solution for restructurings will be a "game changer" in the transition to post-moratoriums.

Fitch considers that the end of moratoriums is the “elephant in the room” for Portuguese banks, and doubts that the public guarantee solution for credit restructuring will be a “game changer” in the transition to the post-moratorium period.

The Portuguese banking sector had more than €36 billion in credit covered by public moratoriums at the end of August, representing about 18% of total loans to families and companies. However, the measure expired at the end of September and thousands of customers had to resume repayments to the bank from then on.

For Fitch analyst Rafael Quina the amount of moratoriums in Portugal is “significant.” “The stock is very high. There were €36 billion in loan moratoriums at the end of August. They ended a few days ago,” he said in a webinar held on Friday.

Rafael Quina said there are banks more exposed than others. “Caixa Geral de Depósitos, BPI and Santander Totta will be less affected than the remaining banks,” he said.

Banco Montepio and Novo Banco are in a more vulnerable position, as they have more loans in stage 2 and stage 3 moratoriums, with a higher level of risk, according to the same analyst.

According to data from the US rating agency, the six major banks in the national system had between €2 billion and €2.5 billion in stage 3 moratoriums, already marked as being in default.

Asked about the government’s solution for ending the moratoriums, namely in relation to the 1 billion line of guarantees for restructuring credit contracts, Rafael Quina said he was “not sure whether the measure will be a game changer” that will help in a smooth transition to the post-moratorium period.