The Bank of Portugal Reports that the Portuguese Banking System’s Resilience Increased in 2017

4 May 2018

According to data released today by Bank of Portugal (BdP), the Portuguese banking system has increased its resilience through improvements to key indicators in 2016 and 2017.

According to data released today by the central bank regarding the banking sector in 2017, there was an improvement to Common Equity Tier 1 solvency ratios in the banking system as a whole, rising from 11.4% in 2016 to 13.9% in 2017.

Regarding asset quality, the NPL coverage ratio improved to 49.3% (from 45.3% in 2016) and the loan-to-deposit ratio increased to 92.6% (from 95.3% in 2016).

As part of its supervision of the country’s financial stability, the Bank of Portugal noted that it had finalised the sale of 75% of Novo Banco’s capital to Lone Star.” The conclusion of the sale eliminated a level of uncertainty that directly impacted the external evaluation of the Portuguese banking system,” the regulator noted in a statement.

According to the BdP, as part of its mission to promote and safeguard financial stability, it is worth noting that the Bank of Portugal finalised the sale of Novo Banco, launched the new Banking Client Portal and received a positive evaluation within the international anti-money laundering supervisory system.

“The completion of the sale of Novo Banco was one of the highlights of the Bank of Portugal’s interventions in 2017, which eliminated a level of uncertainty that directly impacted the external evaluation of the Portuguese banking system,” it noted.

It is also worth highlighting, as part of its role as a prudential supervisory authority, the central bank’s participation in the pre-resolution process of the Banco Popular Espanhol, which guaranteed the continuing operation of its subsidiary in Portugal as it was protected by the adopted resolution measures.

Regarding the business models of institutions under its supervision, a highlight was the continued work to reduce NPLs, through the imposition and monitoring of strategic NPL reduction plans, which contributed to a significant reduction of approximately 9.3 billion euros of these assets in the banking system in 2017.

Original Story: Diário de Notícias / Lusa

Translation: Richard Turner