Fitch lowers major Portuguese banks outlook

Fitch Ratings (file photo)

Fitch credit ratings agency has put four of Portugal’s major banks on a negative outlook, saying the banks remain under pressure due to the ongoing recession.

According to a report by the ratings agency, Caixa Geral de Depositos (CGD), Banco Comercial Portugues (BCP), Banco Portugues de Inversiones (BPI) and Santander Totta are the four Portuguese banks which have “challenges and risks ahead.”

“Banks’ VRs (Viability Ratings)… remain under pressure and sensitive to improvements in their domestic profitability, capacity to absorb further asset quality deterioration in view of continued economic recession in 2012 and 2013 without putting renewed pressure on capital and further rebalancing its funding profile to reduce reliance on ECB funding,” the Fitch report said.

This comes as several strikes and protests have been staged across the European country against the government’s tough austerity measures, which include tax hikes.

The Portuguese Finance Minister Vitor Gaspar announced on October 3 that the average tax hike would rise from 9.8 percent to 13.2 percent in 2013, adding that the unemployment rate is also expected to rise from 16 percent to 16.4 percent next year.

Meanwhile, the global economic institutions including European Central Bank (ECB), International Monetary Fund (IMF) and the European Union (EU) are keeping an eye on Portugal’s implementation of spending cuts and reforms required in return for the 78-billion-euro (USD 102 billion) rescue package the country received in 2011.

The international creditors have agreed to relax Portugal’s deficit targets for 2012 and 2013, rewarding the Portuguese for pushing through reforms.

Battered by the global financial downturn, the Portuguese economy fell into a recession which led the country to negotiate in 2011 with the IMF for a bailout loan. (PressTV)

TNP/JR

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Comments

  1. Just saying says:

    time to read this article

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