Two Portuguese banks eye bailout funds

Leading Portuguese banks BPI and BCP said Thursday they may recapitalise using EU and International Monetary Fund emergency funds allocated in May to rescue the country from debt default.

BPI needs 1.72 billion euros and BCP 2.36 billion euros, the two banks said in separate statements, adding that they may draw on the 12 billion euro (17 billion dollar) bailout funds in the rescue to recapitalise.

“There is no shame in calling on these funds,” BCP chairman Carlos Santos Ferreira was quoted as saying by the Portuguese news agency Lusa, adding that such a move would calm the financial markets.

BCP said it had already raised 600 million euros.

European leaders at an emergency summit on Wednesday called on banks to raise their core capital ratios, a key measure of stability, to nine percent.

Portugal had already adopted this target under the earlier bailout by the European Union and IMF which made 78 billion euros available to it, including 12 billion euros for the financial sector if needed.

The European Banking Authority calculated that Portuguese banks overall need to raise 7.8 billion euros to restore their balance sheets at a time when high public debts are raising fears for the stability of the eurozone.

BPI shares rose more than eight percent on the Lisbon stock exchange Thursday after the announcement, and BCP more than seven percent, as markets soared worldwide on news of the wider eurozone debt deal.