Tuesday December 2, 03:31 PM
UPDATE 2-Portugal banks offer 450 mln euro loan to BPP
By Axel Bugge
LISBON, Dec 2 (Reuters) - A group of leading Portuguese banks extended a loan of 450 million euros ($569 million) on Tuesday to small investment bank Banco Privado Portugues (BPP), which is struggling with liquidity problems,
after the government said it would guarantee the loan.
The Bank (NASDAQ: TBHS - news) of Portugal said four new provisional administrators had been nominated to restructure BPP, which focuses on asset management for wealthy Portuguese clients. It holds equity stakes in leading Portuguese companies which have plunged in value this year.
'The financial aid is destined to allow BPP to face the responsibilities of the liabilities on its balance sheet to depositors and other creditors,' the Bank of Portugal said in a statement.
The move had been expected after BPP last month said it was having liquidity problems and requested a state loan of 750 million euros to help it weather the global financial crisis.
The head of Portugal's central bank, Vitor Constancio, has said BPP was unlikely to get the 750 million euros in loans as its asset base was too small to justify such an amount from a state guarantee programme.
Instead, six banks including private banks Millennium BCP , Banco Espirito Santo (Lisbon: BES.LS - news) and Banco BPI, decided to extend a loan of 450 million euros to BPP which would be guaranteed by the state separately.
'Due to the contagion risks that the situation potentially involved, it was possible to reach agreement with other credit institutions to lend financial help to BPP and to make that help viable, a state guarantee was given,' the Bank of Portugal said.
The Bank of Portugal said BPP 'confronted serious liquidity problems that were transformed into a situation of serious financial imbalance' after Moody's downgraded its debt rating last month.
'The fact that Portugal won't be associated with a failed bank is important overseas for the image of the country and the local banking system,' said Tiago Bossa Dionisio, an analyst at Espirito Santo Research, referring to the loan.
Portuguese banks have weathered the global financial crisis relatively well thanks to conservative lending practices and the absence of a house market boom in recent years.
The government has reacted by offering state guarantees of up to 20 billion euros on bank loans and 4 billion euros in capital for banks.
Millennium and BES have said they would draw on the government's state guarantee to issue debt.
According to BPP's website (www.bpp.pt), the bank's liabilities rose by 39 percent in 2007 to 1.9 billion euros. The Bank of Portugal said the state's guarantee of the loan to BPP is backed by assets held by the bank worth 672 million euros.
Under the loan to BPP, Millennium and state-owned Caixa Geral de Depositos will extend 120 million euros each, BES will lend 80 million euros, Spain's Santander (Madrid: SAN.MC - news) 60 million euros, BPI (Milan: BPI.MI - news) 50 million euros and Caixa Central de Credito Agricola 20 million euros.
(Reporting by Sergio Goncalves and Axel Bugge; Editing by Jason Neely) ($1=.7908 Euro) Keywords: FINANCIAL PORTUGAL/
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
