Banking sector recovers €1 billion
Updated: 17-Feb-2012
After a year in which Portugal’s banking sector made historic losses over exposure to Greek bonds and costly recapitalisation programmes, banks netted a surprising €1.083 billion windfall on the world’s stock markets.
Expectations that a political and financial deal for Greece would be struck this month led bank shares to rally, raking in €873 million in one single day alone last week.
In fact, in just eight days, the banking sector in Portugal virtually recovered all of the money it had lost in 2011.
With investor confidence returning, BCP, BES, BPI and Banif all increased the value of their shares by over €1 billion.
Wednesday, February 8 proved a red letter day for the sector as the nation’s main stock market index, the PSI 20, registered the best performance for Portuguese shares worldwide. Both BPI and BES saw their shares soar by 15% and 13% respectively.
Troubled bank BCP saw its best ever liquidity levels from selling 500 million shares. Since the beginning of the month, and following the presentation of its annual financial report by outgoing president Carlos Santos Ferreira, the bank recovered €331.5 million on the stock market.
But it was Portugal’s oldest and most respected bank, BES, which coined in the most from returning investor confidence; the value of its shares soared by €599 million.
BPI saw its shares recover by €123.7 million and Banif’s shares increased in value by €28.5 million.
Analysts say that the expectation that Greece will reach an agreement with the ‘Troika’ and its creditors have had a positive impact on stock markets around the world.
The other reasons were that the banks had all released their results, had carried out their recapitalisation programmes and put their houses in order, ending months, if not years, of uncertainty and speculation as to the financial health of the nation’s banking system.
The entry of new shareholders in the country’s largest banks – including Chinese shareholders in BCP - has also provided a boon for Portugal’s banking sector.
“Investors are buoyed up by the entry of new shareholders and capital injections,” says stock market specialist Pedro Oliveira from GoBulling.
The European Banking Authority (EBA) is to analyse recapitalisation plans presented by Portuguese banks but has already stated in a preliminary analysis that it is “very impressed” by the willingness shown by Portugal’s banks to take all of the adequate measures and fulfil all prerequisites over core capital and liquidity levels.
Last year had proved a particularly black year for the nation’s banks which recorded record €1 billion losses because of recapitalisation orders from the European Central Bank and exposure from Greek bonds in which many banks had invested heavily over the past decade. In the space of just one week, those losses have been recovered.
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