The Wall Street Journal Escreveu:Portugal Considers Bad BankLISBON—Portugal is considering setting up a government-administered "bad bank" to carry toxic housing loans held by domestic banks, as it seeks ways to feed capital into public companies in dire need for cash.
According to government and bank officials, public companies are facing a serious and worse-than-expected credit crunch after foreign banks cut lending to many of them. Transferring banks' bad debt to a vehicle would allow the remaining "good bank" entities to lend more, the officials said.
Although details including the size of the vehicle are still under consideration, the government would likely pay for the loans at a discount, they officials said.
Prime Minister Pedro Passos Coelho has said the country's €78 billion (roughly $108 billion) bailout program mistakenly assumed that the public companies would be able to finance themselves in the markets. In a recent speech, he estimated that the public companies must refinance €3 billion this year alone.Portuguese banks have already stepped in to fill the funding gap, but they are facing liquidity problems of their own since the sovereign-debt crisis has deprived them of access to the bond markets. Banks have been heavily reliant on borrowings from the European Central Bank for the past year, with the latest figures showing borrowings stood at €45.6 billion in September.
Bank officials have warned the government that they can't increase lending to some sectors without cutting in others. That has raised fears of a credit crunch to the economy, which would lead Portugal into a deeper recession.
"Avoiding a credit crunch is a serious concern right now," a government official said. "This 'bad-bank' set-up would be a good solution," he added.
Officials from the government, banks and the Bank of Portugal are expected to discuss the move with officials from the European Union and the International Monetary Fund, who arrive Monday in Lisbon to start a quarterly evaluation of the country's bailout program.
In an interview, the head of Portugal's largest bank by market capitalization, Banco Espirito Santo SA, said banks have proposed the bad-bank solution to the government, although they pushed for the assets to be loans to the public sector itself.
"If implemented, this idea should be of great assistance," Chief Executive Officer Ricardo Salgado said.
Besides a liquidity crunch, Portuguese banks are facing pressure to quickly boost their capital ratios to protect them against potential losses, including from sovereign-debt portfolios.
Although banks said they will seek capital from private and existing investors, some may have to tap a €12 billion fund under the €78 billion aid program, which would make the government a shareholder of the banks.
Portugal's largest bank, Caixa Geral de Depositos, is already state-owned.