Portugal pledges to "stabilise financial system" in letter sent to EC
by TPN/ Lusa, in
News · 19-07-2016 07:08:00 ·
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The Portuguese government has said in a letter sent to the European Commission (EC) it is “committed to stabilising the financial system” and wants a “rapid” conclusion to the issues of state bank Caixa Geral de Depósitos and Novo Banco.
According to the report sent alongside the letter sent to the EC as part of the process of deciding on the sanctions applied to Portugal for its excessive budget deficits between 2013 and 2015, “a quick and efficient conclusion” of the banks’situations are “the crux of reducing uncertainty.”
The Portuguese prime minister told Público newspaper today that he had told the EC that this year’s budget had a cushion to keep the national deficit under 3% of GDP.
Last week the European Union’s Council of Finance Ministers (Ecofin) decided that Portugal should be sanctioned for not having adopted “effective measures” to correct excessive deficits between 2013 and 2015.
The government is now negotiating new terms for the loan provided by the Portuguese treasury to the Novo Banco Resolution Fund, which could make the Fund solvent even if Novo Banco is sold for a much lower price.
"Regardless of the price of the sale [of Novo Banco], the responsibilities of the Resolution Fund in relation to the State will remain. A sale for a low amount will imply higher responsibilities for the system’s participants, but they cannot count on any discounts from the taxpayer,” Prime Minister António Costa said at a press conference.
After the collapse of Banco Espírito Santo, Novo Banco received a capital injection of €4.9 billion through the Resolution Fund. The Portuguese State provided €3.9 billion and the banking system provided €1 billion.
The EC has demanded that Novo Banco be sold by August 2017, after extending the deadline for its sale by 12 months.
Novo Banco posted a loss of €980.6 million in 2015.