Portugal’s sovereign debt crisis and subsequent bailout by the EU and International Monetary Fund (IMF) has had a profound impact on the country’s banks. Their credit ratings have been downgraded to junk status, they have been shut out of international capital markets, their share prices have fallen sharply, and all but one of the country's five leading lenders – Banco Santander Totta – posted a loss in 2011.
From out of this upheaval, however, a stronger, leaner financial sector is emerging in readiness for a post-crisis period of growth and recovery. “The capital ratios of Portuguese banks are higher today than they have ever been,” says Fernando Ulrich, chief executive of Banco BPI. “There has been significant deleveraging. Credit-deposit ratios have improved considerably. The whole system is much stronger than it was two or three years ago.”
