The €1.4bn capital shortfall uncovered by the European Central Bank in the November stress-test at Novo Banco might suggest that recovery is still some way off for the Portuguese banking sector, but results at other large banks in Portugal show the opposite.
Novo Banco, the so-called “good bank” salvaged from the break-up of Banco Espírito Santo last year, is still weighed down by the issue of legacy loans which are worryingly trending upwards. In the first six months of the year, non-performing loans (NPLs) at Novo Banco grew 3.4%, bringing the total stock of soured loans at the bank to 12.1%.
