Portuguese banks “still have a high level” of exposure to public debt securities, but “for now the situation seems manageable”, considers a DBRS Morningstar report published on Monday.
Portuguese banks still have significant exposure to listed securities. The increase in sovereign debt spreads had an impact on the fair value of reserves and capital ratios of some Portuguese banks in the first quarter of 2022, although the impact, for now, seems manageable”, said Nicola De Caro. , vice president. senior chair of the Global Financial Institutions team at DBRS Morningstar, cited in the report.
In the report Portuguese Banks: An Analysis of Sovereign and Other Debt Exposures, published this Monday, DBRS Morningstar states that the sharp rise in inflation and the “tightening” of monetary policy by the European Central Bank (ECB) and other central banks has led to an increase in interest on the debt European sovereigns”, more evident in some European countries, but that the “spreads” have decreased since the ECB’s announcement on June 15.
“Large Portuguese banks have significant exposures to sovereign debt of around €56 billionincluding debt securities and loans, or 18% of total assets at the end of 2021″, indicates DBRS, specifying that “internal exposures represent 41% of total exposure, or 7.7% of total assets , while the exhibition The rest is made up of Spanish, Italian, Polish and Irish sovereign debt.
DBRS states that “since 2018, Portuguese banks have made changes to the accounting designation of some debt securities, which led to a significant reduction in exposures carried at fair value, while debt securities carried at amortized cost increased significantly. , which resulted in a significant reduction in exposures recorded at fair value lower impact on P&L ratios [‘profit and loss’] and capitals”.
Source: Observadora
