Portugal’s Prime Minster, António Costa, has hit back at criticism from the Social Democrats, saying that the former coalition government leaders have absolutely no credibility when referring to the current instability in the banking system as it was on their watch that problems at BES and Banif were hidden away until it was too late.
The president of the PSD, Pedro Passos Coelho, and the Social Democrat parliamentary leader, Luis Montenegro, both have thought it sensible to accuse the government of making statements that have contributed to the instability of the banking sector.
According to Costa, "the PSD’s attitude of hiding these problems prevented these same problems from being solved." "Had they adopted timely measures for Banif, they could have saved the bank."
The PM said that one of the central objectives of his government "is not to allow a new BES or Banif situation, a situation that only existed because of the negligence in pretending that problems did not exist." "Now, we must find answers to the problems."
The IMF has weighed into the credibility of Portugal’s finances, saying that the country is one of the European countries that currently threatens the financial stability of the entire European Union and beyond.
The International Monetary Fund says that "the legacy of unresolved problems in the European banking system, particularly in Italian and Portuguese banks, is a risk that the world economy faces in 2017.”
One problem bank, Caixa Geral de Depósitos, needs swift analysis and rescue proposals, according to António Costa, who added that there is no reason why vital information on the banks financial state and proposals for the business can not be obtained quickly from Portugal’s regulatory bodies and the Directorate-General for Competition.
Caixa Geral is still awaiting the approval of a recapitalisation plan but Costa said the government would not be applying any pressure to speed up the process.
As for the IMF conclusion that the Italian and Portuguese banking system was presenting a threat to European financial stability, the prime minister said that all bank are suffering from "increased regulatory requirements and a very significant reduction in interest rates, which is good for those who are paying for loans, but bad for the banking businesses."
For António Costa, the priority "is the strengthening Caixa Geral as large public bank and a large pillar of the Portuguese financial system," while avoiding putting a figure on the bank’s capital needs which vary from €3 billion to €5 billion depending on which newspaper you read.
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