Next stop Lisbon?

26 November 2010 By George Hay Follow @gfhay

The market is wary of Portugal’s lenders. But they have not been profligate. Rather, their ability to roll over wholesale funding is tied to the solvency of the sovereign. And that makes them part of the problem.

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Portugal's banking sector has to refinance 28.2 billion euros of debt by the end of 2012, according to KBW. The three biggest private banks Banco Espirito Santo (BES), Millennium BCP and BPI have to refinance 19.6 billion euros of this.

At the end of September, BES, BCP and BPI had loantodeposit ratios of 170 percent, 163 percent and 132 percent respectively, and core Tier 1 ratios of 7.9 percent, 5.6 percent and 8.2 percent, according to Caixa Banco de Investimento analysis.

On average, 3.8 percent of Portuguese bank loan books are past 30 days in arrears. The average loss rate for the three top Portuguese banks was 64 basis points as of the end of September.

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