LISBON, June 12 Portugal has reached an
agreement with JP Morgan in a row over costly interest
rate hedging contracts sold to state companies, the finance
ministry said on Wednesday.
The dispute, during which both sides threatened legal action
at one point, stems from complex hedging products sold by
various banks to companies such as the Lisbon and Porto metro
operators. The government has been trying to stem losses of up
to 3 billion euros from these deals.
The government entered into talks with JP Morgan over the
dispute and said in a statement on Wednesday that it could
"confirm that the negotiating process was concluded last week."
The contracts between JP Morgan and public sector companies
have now been closed and relations with the bank have been
"normalised," it said.
The row had echoes of similar battles in countries such as
Italy where bank clients said they were missold products.
Portuguese treasury secretary Maria Luiz Albuquerque said in
April the government had managed to renegotiate interest rate
swap contracts containing "highly speculative elements" with
some banks, cutting by 20 percent the potential liabilities from
swaps that could total 3 billion euros.
Separately Portugal said on Tuesday it had appointed JP
Morgan as financial adviser for the planned privatisation of the
national postal service.