UPDATE 1-Portugal offers banks 4 bln euros to boost capital

(Updates with details, incorporates PORTUGAL-BANK)

LISBON Nov 2 (Reuters) - Portugal will provide up to 4 billion euros to the country's banks to help them boost their capital ratios during the global financial crisis, Bank of Portugal Governor Vitor Constancio said on Sunday.

"This programme of recapitalizing banks is very important for the system," Constancio told reporters. "Portuguese banks will not be able to avoid reinforcing their capital ratios and, in a voluntary fashion, they now have this government programme available."

The move, which was similar to ones unveiled in other European countries in recent weeks, was announced as the government said it was intervening to nationalize a small, private bank, Banco Portugues de Negocios (BPN).

Constancio said the funds had nothing to do with problems of solvability in the banking system as a whole.

Finance Minister Fernando Teixeira dos Santos said the measure was temporary and that the government would take preferential shares in banks in return for the capital. The plan would last a maximum five years.

"Without a doubt, before advancing, we will talk with the insitutions that represent the sector, seeking their reaction," said the finance minister.

Teixeira dos Santos said the programme was simply aimed at putting the Portuguese banking system on the same footing as others. "This need of recapitalization has nothing to do with weakness of the Portuguese financial system, but with the necessity of not being left behind other financial systems in Europe," he said.

So far in the global financial crisis, the Portuguese government had only offered a guarantee of loans to the banking sector, up to a total of 20 billion euros.

Constancio said the aim of the funds was to boost capital ratios. "What this is about is an objective for the banks to reach a capital ratio of 8 percent," he said.

Portugal's leading banks have generally been viewed by analysts as weathering the international credit crunch relatively well due to conservative lending practices and the lack of a housing boom in Portugal in recent years.

Portugal's three leading banks, Millennium bcp (BCP.LS), Banco Espirito Santo (BES.LS) and Banco BPI (BBPI.LS) all reported lower profits for the third quarter, but with no write-downs like many international banks have. (Reporting by Sergio Goncalves; writing by Axel Bugge, editing by Richard Chang)