Portuguese Biggest Banks Try New Approach to Tackle €25 Billion in Bad Loans

Portugal’s three biggest banks have agreed to create a jointly managed platform to tackle their bad loans, one of Europe’s largest problem debt piles, the Financial Times reported. Millennium BCP, Novo Banco and state-owned Caixa Geral de Depósitos said in statements to the CMVM, Portugal’s stock market watchdog, late on Thursday that the platform was aimed at “speeding up the reduction of non-performing exposures”. The three banks account for most of an estimated €25bn to €30bn of bad debt in the Portuguese banking system, about 15 per cent of total credit portfolios. Problem loans expanded rapidly during a deep recession triggered by the eurozone debt crisis. The plan, which has been agreed with the central bank and the government, differs from mechanisms adopted in Spain and Ireland by avoiding the need for a state-backed ‘bad bank”. Instead, the problems loans will remain on the books of the individual banks with no state guarantees. Read more. (Subscription required.)