Prime Minister, António Costa, again has laid into the Bank of Portugal but remains unable to sack its governor without the cooperation of the European Central Bank.
The current source of the premier’s discontent is the central bank’s lack of ambition to reduce bad debt in Portugal's banking sector.
The PM thinks that way that bad debt is managed in the banking system is insufficient and that both the Bank of Portugal and the banks that it regulates, should be "bolder" in solving the problem.
The prime minister said the Bank of Portugal is lukewarm in its dedication to reducing levels of bad credit in the sector, adding that the debt information sharing platform created between BCP, Caixa Geral and Novo Banco is "insufficient" and that "both the Banco de Portugal and the banks should be a bit more daring to solve these kinds of problems."
Asked on TVI if he was worried about the excess of credit in the economy, given the growth of mortgages and consumer credit, António Costa began by responding that his primary concern is with the lack of productive investment in Portugal's businesses.
Among the reasons for the lack of this investment is the current banking mindset which is "exclusively accommodating consumption of households or in home purchase credit," and not making intelligent lending decisions to Portugal’s businesses.
Non-performing loans pose a risk to the stability of the financial sector, limiting its ability to lend to the economy. Although these loans steadily have declined in recent years, they remain well above the European average.
At the end of March, 12.8% of all bank lending in Portugal was classified as "bad" credit, well above the European average of 7.3%, topped only by Greece and Cyprus.
Comments
HMM
Private Institutions Bailed out by tax payers. Surely a mistake..
If the Prime Minister of a European State cannot control The State Banking sector in his or her own Country. Well then what hope is there for the rest of us when it comes to how safe are savings are in the same said banking sector..