Portugal announces nationalization of troubled BNP bank
3/11/2008 16:17
The Portuguese government said yesterday that it will propose to
parliament the nationalization of the Portuguese Bank of Business (BPN), which
has a debt of 700 million euros (US$890 million).
Finance Minister Fernando
Teixeira dos Santos told a press conference after a special cabinet meeting that
the government is to assure deposits in BPN.
According to Teixeira, the
management of BPN will be given to the "Caixa Geral (State's cashbox) of
Deposits" (CGD) under central bank the Bank of Portugal's supervision from Nov.
3.
The CGD will be in charge of managing and presenting a development plan to
solve the BPN's problems.
Teixeira, standing beside the Bank of Portugal
Governor Vitor Constancio, said BPN is not fulfilling the minimum level of
solvency and "accumulated losses have brought about negative capital."
Both
he and Constancio played down the speculation that more banks would be
nationalized, saying that BPN is a separate case and it will not be taken to
other banks.
The decision to intervene was due to the need to guarantee "a
strong financial system and compete with the rest of Europe," they
said.
Teixeria also announced that the government will inject some four
billion euros (US$5.08 billion) into the bank system through preferential shares
to reinforce its solidity.
Xinhua
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