Portugal govt wants M&A activity in smaller banks

LISBON, July 2 (Reuters) - Smaller Portuguese banks must seek consolidation opportunities to better resist liquidity problems arising from the economic crisis, Portugal's deputy finance minister Carlos Pina said on Thursday.

Five large banks in Portugal -- state-owned CGD, Millennium bcp (BCP.LS), BES (BES.LS), Santander Totta and BPI (BBPI.LS) -- have a market share of over 80 pct in terms of assets, credit and deposits, while several smaller banks such as Banif (BNF.LS) and Finibanco (FINB.LS) split the remainder.

"I am mainly thinking of the smaller-sized institutions that, precisely due to their dimension, are less dependent on deposits and face more difficulties to resist liquidity restrictions like the ones seen recently," Pina told Reuters.

"The government isn't, however, suggesting there should be big mergers at the level of the large financial institutions," he added.

Pina said the Portuguese financial system has, as a whole, shown resilience in facing the financial and economic crisis. (Reporting by Shrikesh Laxmidas and Sergio Goncalves; editing by Hans Peters)