The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Banks tell Portugal to get its house in order

Local firms are finding their own difficulties with funding and credit exacerbated by national crises in growth, inflation and a fiscal deficit. Can they get out of this vicious circle? Nick Kochan reports from Lisbon.

THE MESSAGE OF the Portuguese bankers to their new government, elected on June 6, is blunt. Effectively: "We’re putting our house in order, now you do the same!" At a time when the banks are dealing with high levels of outstanding debt and worrying ratios of capital to risk-weighted assets and deposits to credit, the country is being forced to respond to the ravages of low to negative growth, rising inflation and, most worrying, a fiscal deficit close to 10%. All the main Portuguese political parties have vowed to apply a series of austerity measures, dictated by the troika of the European Central Bank, the IMF and the European Commission, as a quid pro quo for a €78 billion bailout. Bankers and others wait to see how the new government, whichever party is elected to power, deals with the social and economic costs of such an austere plan. It will not be far from bankers’ minds that the last government fell when an austerity package was defeated in parliament. Observers believe this will be a salutary lesson for the next government as it faces the same unenviable challenge.

The troika has laid out a programme to bring the government’s fiscal deficit, presently standing at 9.1%,

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree