LISBON Dec 10 Portuguese banks' borrowing from
the European Central Bank fell almost 3 percent last month
following the first bond issues by two of the country's lenders
since the advent of the sovereign debt crisis.
Bank of Portugal data showed on Monday the cumulative
borrowing, at 54.6 billion euros ($70.6 billion), was still far
above year-ago levels of 45.7 billion euros as banks remained
largely frozen out of the interbank lending market.
On the last day of October, Banco Espirito Santo --
Portugal's largest listed bank by market capitalisation --
priced 750 million euros in three-year unsecured bonds, marking
the return of Portuguese banks to the bond market. It was the
first bond issue by a Portuguese bank since March 2010.
BES was followed by state-run Caixa Geral de Depositos that
sold 500 million euros in bonds on November 27.
Overall dependency on ECB funds remains high but below
June's record of 60.5 billion euros. Top Portuguese banks met
the European Banking Authority's new capital requirements in
June and are on track with their recapitalisation goals.
However, the country's worst recession in three decades has
increased unemployment, bankruptcies and bad loans.
The government plans more austerity measures for 2013 which
some economists fear may perpetuate a recessive spiral and hurt
the financial sector's activity further.
Last week, Portugal's government was forced to provide state
guarantees on European Investment Bank loans given to Portuguese
banks, aiming to shore up EIB-backed financing for the
Credit ratings of Portuguese banks have fallen below
sovereign ratings, making it increasingly difficult for the EIB
to accept their own guarantees as collateral.
($1 = 0.7735 euros)
(Reporting By Andrei Khalip. Editing by Jeremy Gaunt.)