Portugal’s economy is on the up. Data collected by The Banker reveals that its banks’ capital cushions need to see a similar turnaround, reports Danielle Myles. 

Among the four countries to finish assistance programmes provided by the European Stability Mechanism – better known as the EU bailout fund – Portugal’s recovery has been the most sluggish.

Its performance has been overshadowed by the Spanish employment rate, which has grown three percentage points in two years; Ireland’s ability to lure post-Brexit business from the UK; and Cyprus’s growth in gross domestic product – the second fastest in Europe.

However, the economy has performed strongly during the first half of 2017; now its banking sector needs a similar reversal. Sector-wide losses ballooned from $391m to $3.65bn in 2016, while the capital cushions at its biggest banks have also shrunk.

data trends 190917

Caixa Geral de Depositos, historically Portugal’s biggest bank, now ranks third after Tier 1 capital shrank 43% last year, leaving it with a risk-weighted capital adequacy ratio of just 8.07%. It is the subject of a €5bn recapitalisation package being thrashed out by EU and Portuguese authorities.

Millennium BCP is now the country’s leading bank, and despite its Tier 1 base diminishing 18%, its 13.4% capital adequacy ratio is the healthiest among Portugal’s biggest lenders. Novo Banco, which owns the remnants of failed lender Espírito Santo, ranks second despite its Tier 1 base shrinking 23%. Its capital adequacy ratio is moderately lower at 12%.

In fourth and fifth place, Banco Portugues de Investimento and Caixa Economica Montepio Geral have grown their capital base between 3.5% and 5%. Their capital ratios are 11.4% and 10.85%, respectively.

By comparison, the capital ratios of Spain’s top five banks are between 13.8% and 16.2%, while in Cyprus they range from 14.6% to 30%, and in Ireland from 14% to 22%.

All data sourced from www.thebankerdatabase.com

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter