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BPI pays off its emergency state loan

bpiBanco Português de Investimento (BPI) today paid off its debt to the Portuguese treasury with a €420 million transfer.

The bank accessed an emergency loan of €1.2 billion at the start of the economic crisis in 2012.

BPI today announced it had cleaned the slate, including interest, and has informed the regulator accordingly.

"Banco Português de Investimento today repaid to the Portuguese state €420 million contingent convertible bonds (CoCo Bonds*) after obtaining the authorisation from the Banco de Portugal," the bank announced.

The bank, headed by Fernando Ulrich, is the first in Portugal to complete the repayment of state aid. The interest costs between June 2012 and June 2014 amount to €167 at an average 5.3%.

The first repayment by BPI was made in August 2012, with a transfer of €200 million. In the last six months €920 million had been paid off on a loan that has a repayment deadline in 2017.

In addition to BPI, BCP and Banif also resorted to the €12 billion made available to recapitalise Portuguese banks under the Programme for Economic and Financial Assistance.

Banif so far has repaid €275 million of its €1.1 billion loan.

BCP is now preparing for a capital increase of €2.25 billion, of which €1.85 billion will be used to repay part of the €3 billion it accessed.


*CoCo Bonds - Contingent convertibles, also known as CoCo bonds, Cocos or contingent convertible notes, are slightly different to regular convertible bonds in that the likelihood of the bonds converting to equity is "contingent" on a specified event, such as the stock price of the company exceeding a particular level for a certain period of time.

They carry a distinct accounting advantage as unlike other kinds of convertible bonds, they do not have to be included in a company's diluted earnings per share until the bonds are eligible for conversion.

It is a form of capital that regulators hope can help buttress a bank’s finances in times of stress.

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