The governor of the Bank of Portugal said on Monday that the latest developments in European banking give confidence but that the central bank is attentive to the evolution and risks faced by banks and Portugal.
In his speech at the end of a luncheon promoted by the Associação de Hotelaria de Portugal (AHP), Mário Centeno spoke about the evolution of inflation and interest rates, considering that it was important that uncertainty “reduced” to facilitate the definition of the evolution of monetary policy.
In addition, he said, “it does not help that uncertainty is transmitted to the banking sector”, although he pointed out that the risks come from “events that originate outside the eurozone”.
Regarding the Portuguese banks, he said that, in recent years, they have reduced risk (first with a reduction in delinquency) and are better capitalized, in addition to the fact that two banks have concluded their restructuring plans (Novo Banco and Caixa Geral de deposits). However, he admitted that any problem in the financial markets is an added risk.
“It is very important to minimize the turbulence that is generated around the banking sector in the euro area and that could affect us. We all know that with the interactions that the markets have, the risks they face, we have to continue monitoring, to be aware of this dimension”, said the former Minister of Finance (PS Governments of António Costa).
Centeno considered, however, that the “most recent events give confidence”, but that this does not mean that he can subtract attention.
“The process continues and our attention remains dedicated to identifying potential issues when and if they arise“, he stressed, adding that Portugal will overcome any problem more easily if it is more solid (he had previously mentioned improvements in the banking sector, in the economy and in public debt).
“If Portugal does its part, we can be fair and respond positively,” he said.
After intense negotiations over the weekend, Swiss bank UBS agreed on Sunday to buy rival Credit Suisse at a low price, with substantial guarantees from the Bern government and liquidity from the country’s central bank (SNB).
This acquisition plunged bank shares this morning on European stock markets, as investors feared the destabilization of the banking system.
The operation will cost subprime bondholders 16,000 million Swiss francs (16,180 million euros) because the Swiss authorities decided to transfer part of the financial burden generated by the operation.
Already last week, in the United States, Silicon Valley Bank failed, with authorities guaranteeing all deposits for fear that other sizable banks could be challenged.
Silicon Valley Bank. How the biggest banking collapse since the 2008 financial crisis unfolded
The Silicon Valley Bank failure was the second largest bank failure in United States history.after the bankruptcy of Washington Mutual in 2008. Credit Suisse is the second largest bank in Switzerland and suffered liquidity withdrawals last year worth 123.2 billion Swiss francs (126 billion euros).
Source: Observadora
