Banco Comercial Português (BCP Millennium) was the only one of three Portuguese banks examined that failed the latest stress tests conducted by the European Central Bank and the European Banking Authority.
Caixa Geral de Depósitos and Banco Português Investimento passed the tests.
The ECB stress tests were used on 130 European banks, 24 failed and need a total capital increase of €25 billion.
Italy performed dismally with nine of its banks needing a capital injection of €9.4 billion.
Three Greek banks failed along with three from Cyprus, two from Belgium and two from Slovenia with one each from Austria, Ireland, Germany and France.
Banco Comercial Português needs further capital of € 1.137 billion, although the ECB noted that the bank already has raised €2.242 billion since the beginning of the year and that it had already returned €2.25 billion of Portuguese state aid made available through the Troika’s €12 billion facility established to help struggling banks.
The vice president of the European Central Bank, Vítor Constâncio, said today that the results of the 'stress' tests on European banks ensure that the economic recovery will not be hampered by a lack of credit.
"The results ensure that the economic recovery will not be hampered by restrictions on the supply of credit," Constâncio commented at the press conference in Frankfurt at which he presented the results of the stress tests and the review of asset quality carried out jointly by the ECB and the European Banking Authority.
Constâncio was governor of the Bank of Portugal from 2000 to 2010 the former governor of the Bank of Portugal had said that these exercises will allow "increase public confidence in the banking sector" and, in identifying problems and risks, become banks' balance sheets more "robust and resistant."
Constâncio considered that the stress tests were "rigorous" and rejected that they may prove to be a failure, as happened with the last ones conducted by the EBA where banks that had passed later needed bailing out.
The banks that failed now have to prepare capital enhancement plans and submit them within two weeks.
Vítor Constâncio was the governor of the Bank of Portugal between 2000 and 2010. Early on in the global economic crisis, two banks, Banco Português de Negócios (BPN) and Banco Privado Português (BPP) were found to have been accumulating losses for years due to bad investments, embezzlement and accounting fraud.
The government decided to bail them out anyway at a massive loss to the taxpayer.
Vítor Constâncio was supposed to be regulating these banks during his time as Bank of Portugal governor and certainly he knew that the BPN accounts had been wrong since 2001 yet he failed to act.
Whether his sage comments to the press over these stress tests display an improvement in his grasp of financial affairs has yet fully to be analysed.
