LISBON, April 24 The Bank of Portugal on
Wednesday said the bailed out country's banks were
well-capitalised, dismissing a recent assessment made by ratings
agency Moody's that the lenders would need at least 8 billion
euros ($10.4 billion) in extra capital.
"Technically, these calculations by Moody's are based on
principles that are not used by us (Bank of Portugal) nor by the
other European authorities. We trust our evaluations," Bank of
Portugal Governor Carlos Costa told a parliament commission.
The rating agency's lead analyst for Portuguese banks said
two weeks ago that banks' non-performing loans had risen more
than expected because of the country's deepening recession,
justifying the need for extra capital. The Bank
of Portugal has long argued the lenders have enough capital.
"It's not questionable - our banks have comparable capital
ratios with Europe and a comfortable liquidity position.
Portuguese banks are well-capitalised, what they need is to
increase profitability," said Costa, who sits on the European
Central Bank's governing council.
He backed the Portuguese Banking Association's rejection of
the agency's estimates.
Portuguese banks increased their core Tier 1 capital ratios
to an average of 11.5 percent at the end of last year from just
6.8 in 2008, when the global financial crisis struck. They have
so far met all solvency targets set by the European Banking
Authority and the Bank of Portugal.
Banks have used about half of the banking recapitalisation
line from Portugal's EU/IMF bailout, leaving around 6 billion
euros left. The banking association said this would be enough to
cover any potential shortage if such were discovered by new
European Banking Authority stress tests scheduled for mid-2014.
Banks have also been reducing their dependence on ECB
emergency liquidity and have started to issue bonds again.
Costa said banks were willing to provide loans to an economy
mired in its worst recession since the 1970s and the volume of
loans to exporting companies has increased lately.
Financing dried up with the advent of Portugal's debt crisis
in 2010 and still remains restricted overall, according to a
poll of lenders by the Bank of Portugal released on Wednesday.
It showed access to credit and lending terms were practically
unchanged in the first quarter.
Costa said cuts in corporate tax proposed by the government
on Tuesday "will be a good measure" to stimulate the economy.
($1 = 0.7683 euros)
(Reporting By Sergio Goncalves, writing by Andrei Khalip;
editing by Patrick Graham)