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Bank of Portugal's credit recommendations ignored by banking sector

bopcarloscostaDespite a raft of new ‘rules’ from the Bank of Portugal to limit credit, Portugal’s banks have advanced €810 million in mortgages in August alone.

The August figure was €100 million up on the same month last year, signalling that the central bank’s recommendations to the banking sector have gone unheeded.

The August figure was lower than mortgage lending in July - €919 million - and is the highest figure since 2010.

This is the second month during which the Bank of Portugal's credit restrictions are in force. These aimed to limit credit to families to prevent over-indebtedness

In fact, a credit war has erupted among Portugal’s high street lenders with Banco CTT lowering its rates and lending 85% to 90% of a property’s value. Bankinter also has dropped its mortgage rate.

The Bank of Portugal, in theory led by Carlos Costa, (pictured), included a break on consumer loans in his recommendations. These too have been ignored by Portugal’s banks with a further increase in of finance compared to the July and August 2017.

Banks granted €404 million in consumer credit in August, €17 million more than the €387 million euros recorded in July, and €55 million more than the €349 million recorded in August last year.

Recently, the assistant secretary of state and finance, Mourinho Felix, expressed concern about the direction of credit and in particular for consumption.

"Vigilance in the evolution of credit to the economy is fundamental. Credit to individuals, especially consumer credit, should be closely monitored to avoid being recklessly advanced, as in the past, "said Mourinho Felix.

In the first eight months of 2018, banks have advanced nearly €11 billion in loans to households, up18% on the same period last year.


0 #3 Mike Williams 2018-10-12 11:19
Portugal's 10 year borrowing rate now comfortably above 2%. Not greatly impacting on you or me - the Grommit's of Portugal - but when you already have several hundred billions of debt and it is increasing by a billion each month of yet more borrowing ... something that may be weighing on Mr Wallace.
+3 #2 Mike Williams 2018-10-11 09:13
Banks need to factor in property values not at today's valuations but following the much anticipated crash. That is likely soon due to Global jitters, eurozone jitters and in particular Italy's jitters. Portugal being one of the most exposed in the eurozone for its own exorbitant public sector debt and for lending heavily to its alma mater, Italy. Only 2 days ago the 2% limit on 10 year Portuguese Government bonds was broken for the first time in ages. Today it is heading back up and up towards unsustainable territory and with the ECB no longer buying Government debt, entirely out of the Portuguese Governments control.
+6 #1 nogin the nog 2018-10-10 23:10
Its was not the needs of the many that brought about the last crisis, but the greed and stupidity of the few that manage these institutions.. :-*