Promotional Bank will finance the NPL mechanism
The Development Finance Institution (IFD), better known as promotional bank, will be involved in the solution to clear NPLs in the Portuguese banking. The agreement was made with CGD, BCP and NB.
The Portuguese Government is said to have closed the agreement to clear non-perming loans (NPLs) harming the Portuguese banking. The Bank of Portugal and the prime minister António Costa should soon announce that the negotiations for the development of a new mechanism have been concluded between CGD, BCP and Novo Banco (NB). The news were disclosed this Thursday by Público, adding that the new mechanism will have the promotional bank as one of its financiers.
According to the Portuguese newspaper, the mechanism is designed to clear the non-performing loans — NPLs. It will emerge as a Complementary Group of Companies which includes the three banks, but the access to it is not exclusive. More exactly, its goal is to recover those assets, and possibly sell them. The mechanism includes only the credit granted to companies, but whose debt liquidation is already more than 90 days past its maturity.
The Government aims to solve the NPL portfolio in the Portuguese financial sector, an issue which has been unresolved for almost two years, preventing the liquidation of companies who are struggling, but are still viable, Público explains.
It is estimated that there are 30 billion euros worth of NPL in the Portuguese banking. Half of that amount is not provisioned for and needs to be cleared — the majority of NPL concerns Novo Banco (4.5 billion). Next comes Caixa Geral de Depósitos (four billion), BCP (three billion) and, lastly, Montepio (two billion).
The negotiations involve the three banks with the highest amount of non-performing loans, but as ECO had previously disclosed, first-hand, other banks can voluntarily become part of the mechanism that is being created.
