A month after Portugal emerged from its international bailout, its lenders are far from the promised land they might have hoped for.
Most predict losses for 2014 due to a weak economy, low credit demand and a resulting price war that depressed loan rates to levels the chief executive of second-largest listed bank, Millennium BCP’s (BCP.LS) Nuno Amado, says are too low.
Yet while ratings agencies continue to hold the sector among Europe’s weakest, several of the country’s most senior bankers told Reuters they believe the worst is over.
“They (rating agencies) were late in understanding the situation of many banks (before the crisis) and now I think they are late again in recognising the major improvements that are taking place in Portuguese banking,” said Fernando Ulrich, chief executive of Portugal’s third-largest listed bank BPI (BBPI.LS).
It was day-to-day concerns of growth and recovery that were last week top of the minds of Amado, Ulrich and the chief executive of Santander Totta, Portugal’s third-largest bank, rather than an executive shakeout at their rival Banco Espirito Santo (BES.LS).
After months of wrangling with the Bank of Portugal, BES’s founding family agreed to cede its seats on the bank’s board and their patriarch Ricardo Espirito Santo Salgado stepped down as chief executive.
The central bank’s key aim was to avoid any threat to BES and any risks to confidence in the broader banking system, which has assets of almost 460 billion euros ($624.5 billion) or 2.8 times Portugal’s economic output as measured by GDP.