(Adds quotes, association positive on ECB stress tests)
By Sergio Goncalves
LISBON Aug 6 Portuguese banks will work
together with the authorities for the swiftest sale of the new,
healthy bank carved out of the troubled Banco Espirito Santo
, the head of the Portuguese Banking Association (APB)
said on Wednesday.
Fernando Faria de Oliveira told Reuters the intervention by
the Bank of Portugal to rescue one of the country's largest
lenders that involved an injection of 4.9 billion euros mostly
in state loans, was positive considering BES's systemic
As part of the plan, the state loaned 4.4 billion euros to
Portugal's bank resolution fund, which became the formal owner
of the healthy new Novo Banco, while the "bad bank", housing
BES's exposures to toxic assets, will be wound down.
In an emailed reply to questions by Reuters, Faria de
Oliveira also said banks have proposed to make an additional
contribution to reduce the state loan to 3.9 billion euros.
Portuguese banks finance the resolution fund that was set up
in 2012 and had only a few hundred million euros - not enough to
rescue BES. Now the fund has to sell the bank to investors to
repay the state. The loan has an incremental interest rate
designed to encourage its repayment soon.
"The associated banks and the association manifest their
readiness to collaborate with the authorities, namely with the
resolution fund, for the success of the adopted measures and the
swiftest sale of shares in Novo Banco," Faria de Oliveira said.
He added though that the banks had not been involved in the
Concerns that banks may end up footing the rescue bill if
they do not raise enough money for Novo Banco to repay the state
in full hit their shares on Wednesday, causing the largest
listed lender, Millennium bcp, to fall 15 percent.
But Faria de Oliveira was mostly upbeat on banks' prospects,
saying the additional contribution to the fund should come from
their improving performance.
He said that now that BES's insolvency has been avoided, the
banking association expects the country's banks to successfully
pass the European Central Bank's stress tests this year.
The ECB is putting the euro zone's 131 largest banks through
an unprecedented health check before it becomes their supervisor
(1 US dollar = 0.7472 euro)
(Writing by Andrei Khalip, Editing by Louise Heavens and David