Between 2008 and 2014, Portuguese taxpayers unwittingly have stumped up the equivalent of 11.3% of the country’s gross domestic product to give state support to a sector that many had imagined was part of the private sector - the nation's banks.
A total of €19.5 billion has been used, says the European Central Bank in a study into the "budgetary impact of support to the financial sector during the crisis" in which Portugal's government is roundly criticised for its actions.
It is not so much the sums advanced to a collapsing banking sector, Irish taxpayers funded 31.1% of GDP and Greece 22.1%, it's more to do with whether governments have been paid back for their largesse.
The ECB report concludes that some governments have failed miserably in the recovery of their aid to banks, Portugal the worst.
The asset recovery rate is "particularly low in Ireland, Cyprus and Portugal, but relatively high in the Netherlands," reports the ECB.
Portugal is singled out for special note as, basically, the government has failed to recover any amount worth noting.
"Most eurozone governments supported the financial sector with a set of measures," which varied from country to country, as has the success in recovering the public’s money, according to the report.
The ECB gives examples of injecting capital into troubled banks by buying its assets at "well above the market rate."
"These recapitalisations were intended to cover the accumulated losses of banks but eventually have resulted in losses for governments."
"Some governments also were forced to nationalise banks."
Singling out Portugal as an example of how not to do it, the report adds that "some impaired assets were acquired by vehicles created especially for this purpose, like the toxic and troubled assets of BPN which then went up in flames.”
In Portugal, the amount committed to BPN when it was fully nationalised has cost the taxpayer more than €5 billion and it’s not over yet with additional expense being drip fed into the state budget every year under "impairment" charges.
Another case in Portugal was BPP which cost over €450 million when the state underwrote its debts.
In 2012, the Portuguese government began to support its banks by buying into their capital using contingent capital obligations, or CoCos.
BCP used up €3 billion of this facility, BPI €1.5 billion, Banif €1.1 billion with these banks only repaying 72% of this aid.
In 2014, the Portuguese taxpayer had to borrow over €3.9 billion to lend the resolution fund to prop up Novo Banco whose future is uncertain but losses less so.
In short, Portugal’s government has splashed out €19.5 billion on its banking sector in moves that the ECB report roundly criticises.
Bailing out chums is never a good idea and, with a couple of weeks to go before the general election, this report lays bare the actions of successive governments which have used taxpayers' money as if it never needed to be accounted for.
