Are Portuguese Banks Safe?

[Farol]

With most European countries having banks that are in crisis and being bailed out by their Governments can somebody resident in Portugal give some feedback on media coverage of the stability of the various Portuguese banks.

Also are there any protection schemes in place along the lines of those in the UK?

I guess most of us that own property in Portugal have a bank account there but being in the UK at the moment UK TV doesn't report on other countries until it's too late to get your money out.

[steve]

There is a Government guarantee on savings of €25000 per person per bank.

As far as I have been able to ascertain lending by Portuguese banks comes under tight central control and there has been no significant high risk lending. The concept of investment banks does not seem to exist.

As far as mortgages are concerned the ability to meet the payments is as important as the equity in the property and so there is no sub prime market here.

I enquired about the liquidity of my bank here and saw figures that showed a level of over 7%. This did not seem much to me but I have since learned that many UK banks do not reach 5%.

The national papers here were last week downplaying the situation with Portuguese banks - quite unlike some of the popular UK press in respect of UK banks. Certainly I have not seen any signs of panicking here.

[biffa]

I think the problem is if panic starts. We had a brief shortage of petrol here and the supermarkets were invaded by panic buyers. All we need is a run on some of the smaller banks and we could be in trouble. I understand deposit security has been increased to 50k europe wide but can they really pay that out? I have heard of panic withdrawals today at BPN......

[Misty]

I don't know whether I am allowed to mention this but there is a thread on this subject on the expat focus forums which covers quite a lot.

[cereza]

biffa
quote-
I think the problem is if panic starts. We had a brief shortage of petrol here and the supermarkets were invaded by panic buyers. All we need is a run on some of the smaller banks and we could be in trouble. I understand deposit security has been increased to 50k europe wide but can they really pay that out? I have heard of panic withdrawals today at BPN......
unquote
yes the problem is always if panic starts but then you help to foment panic by passing on what you heard without any corroboration!!- Amazing!!!

[wolfie]

think above is correct - when we took out our Portuguese mortgage they were a lot fussier than UK - 70% max and look at your expeneses more .The concept of 125% mortgages and interest only ones - doesnt exist .So dont think they have taken the risks that UK/USA banks did .But given the global nature of banking doesnt mean they are immune but think they have less exposure to toxic loans

[Gazza]

Wolfie is correct in that their cautious approach will help them but the other half of the equation is their dependency on the interbank market for day to day funding ie liquidit. Also their ratio of deposits versus lending is key. The fact there are no outright Portuguese Investment Banks working solely in the wholesale high risk end of teh market and that most have a natural source of cash through retail deposits should help them.

G

[dennisg]

According to this week's Algarve Resident both Millennium and BPI are facing liquidity problems, but the Minister of Finance has stated that he is guaranteeing "The Portuguese" that their deposited savings are safe. It doesn't say whether he is doing likewise for non Portuguese but I would hope so.

[BONDI]

Read this weeks algarve resident for up date.

[e-richard]

Read this weeks algarve resident for up date.

You can read it online here

[biffa]

I think the guarantee was upped to 50k but I didn't like the Finance Minister saying that they would not let any banks "that would have an impact on the financial sector" fail. Does that mean they would just back up certain banks like CGD? Anyway we are all still batting here at the moment.

Replying to Cereza - I take on board what you say but certainly I had corroboration - queues cashing in their PPR's including one of my colleagues family. I didn't just dream it up!.

[biffa]

A informação sobre uma "operação clandestina", como lhe chamou ontem Vítor Constâncio, apanhada há meses pelos investigadores da ‘Operação Furacão’, deu um golpe mortal no BPN e apressou a nacionalização quando a situação deste banco se fragilizou nos últimos dias. O Ministério Público detectou uma operação de centenas de milhões de euros sem qualquer suporte contabilístico num balcão virtual do Banco Insular de Cabo Verde, que gerou um elevadíssimo valor incobrável.