* Millennium bcp to draw 3 billion euros from bailout fund
* Banco BPI dto raw 1.2 bln, Caixa Geral de Depositos 1.65
* Millennium to raise further 500 million euros via rights
* Banco BPI to raise another 200 mln
(Adds details, comment, background)
By Axel Bugge
LISBON, June 4 Three leading Portuguese banks
will draw on funds provided under the country's 78 billion euro
($96 billion) international bailout to meet tough new capital
requirements as they struggle with the country's debt crisis.
Millennium bcp, Portugal's largest private bank in
terms of assets, said on Monday it would draw 3 billion euros
from the bailout fund's "recapitalisation line", while Banco BPI
will draw 1.2 billion. State-owned Caixa Geral de
Depositos will draw 1.65 billion.
The move by the three banks was expected and leaves only
Banco Espirito Santo (BES) among Portugal's leading
banks without state funding. BES has said it does not intend to
draw on the recapitalisation line after having raised 1 billion
euros from shareholders.
"These operations will put Portuguese banks in a solid
position compared with other European banks," Finance Minister
Vitor Gaspar told a press conference as he presented the results
of the fourth review of the country's bailout.
Under Portugal's bailout by the European Union and IMF, 12
billion euros was set aside for the recapitalisation of its
banks. Capital injections to the sector will be carried out
through special bonds convertible into equity, known as Cocos,
which must be paid back in five years.
If not repaid, the state would end up holding about 33
percent of BPI and 40 percent of Millennium, according to Andre
Rodrigues, an analyst at Caixa Banco de Investimento.
Portugal's banks have effectively been cut off from European
capital markets for nearly two years since the country's debt
crisis broke out and it entered its worst recession since the
1970s under the weight of sweeping austerity measures.
Shares in Banco BPI surged on the fact that the capital
raising was relatively small, while Millennium slipped on the
large size of its hike.
"The market believes that BPI will be able to turn the
situation around and return the money to the state in the five
years under the plan," said Emanuel Vieira, a trader at
brokerage Golden Broker. "In the case of Millennium there were
already doubts as it is a much higher amount."
Shares in Millennium were 1 percent lower at 0.099 euros per
share and BPI was 7 percent higher at 0.408 euros per share.
Under the bailout terms, the country's banks need to have
core Tier 1 capital ratios of 10 percent of assets by the end of
Millennium said it would raise a further 500 million euros
through a rights issue to shareholders, while Banco BPI will
raise another 200 million through the same route.
An analyst who asked not to be named said shareholders were
likely to subscribe to both Millennium and BPI's capital hikes.
Angolan oil company Sonangol is a large shareholder in
Millennium and is likely to participate, the analyst said.
Millennium said in a statement the capital plan was prepared
on the basis it would have to take a further provision of around
450 million euros for risks linked to the deteriorating economic
situation in Greece, where it has a unit.
Many economists have said Portugal is likely to need more
funding for its bailout, or to extend its terms. Still, the
finance minister said on Monday the country had passed the
fourth review of the economy under the bailout and the programme
($1 = 0.8089 euros)
(Editing by Greg Mahlich and David Holmes)