Bloomberg News

ECB Financing to Portuguese Banks Rises to 46 Billion Euros

January 09, 2012

(Adds details of financial-aid plan starting in third paragraph. See EXT4 <GO> for more on the sovereign debt crisis.)

Jan. 9 (Bloomberg) -- The European Central Bank’s financing to Portuguese lenders rose for a second month in December, the Bank of Portugal said.

ECB financing increased to 46.0 billion euros ($58.7 billion) from 45.69 billion euros in November, the Lisbon-based central bank said today on its website. ECB financing levels peaked at 49.1 billion euros in August 2010.

Portugal in April became the third euro-area country to seek a bailout after Greece and Ireland, and will receive 78 billion euros under the agreement with the International Monetary Fund and the European Union. The aid plan earmarks 12 billion euros for Portugal’s lenders if needed.

As part of the aid plan, Portugal’s lenders were required to raise Core Tier 1 capital ratios to 9 percent by the end of 2011 and 10 percent by the end of 2012. According to European Banking Authority rules, they also need a 9 percent capital ratio by the end of June after marking their sovereign debt holdings to market prices.

The Portuguese central bank said on Dec. 8 that the country’s lenders needed to raise 6.95 billion euros in capital to meet the EBA target, which was calculated using figures from the end of September. Since then Portuguese banks have carried out capital increases to reduce their shortfalls.

--Editors: Andrew Davis, Fergal O’Brien

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net


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