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LISBON, June 18 Portugal's finance ministry said
on Tuesday it was in talks with Spain's Santander to
cut potential losses from high-risk derivatives contracts sold
to Portuguese state firms and settle a row that has involved
mutual threats of legal action.
"We are maintaining talks with Santander. Since there is a
possibility of having a deal that would safeguard the state's
interests, the negotiating channel is always open," a ministry
The government would prefer a quick solution to remove
uncertainty, she said, adding that all contracts with early
termination options bearing particularly high risk for state
finances had already been cancelled.
Cash-strapped Portugal, recipient of an international
bailout, has already renegotiated the costly interest rate
hedging contracts sold by other banks, cutting potential
liabilities by about a half to some 1.5 billion euros ($2.00
billion), the spokeswoman said.
Santander-Totta, the Portuguese unit of Santander, is the
only remaining bank that has not yet accepted an agreement in
the dispute. Lisbon has labelled the contracts "toxic" and
threatened in April to challenge them in court.
Santander-Totta was not immediately available for comment on
Last week, the finance ministry said it had reached an
agreement with JP Morgan in the row, which stems from
complex hedging products sold by various banks to companies such
as the Lisbon and Porto metro operators.
The row has echoes of similar disputes in countries such as
Italy where bank clients said they were missold products.
($1 = 0.7492 euros)
(Reporting By Sergio Goncalves, writing by Andrei Khalip,
editing by Gareth Jones)