ECB financing to Portuguese banks increases a third month

March 8, 2011 - 0:0

The European Central Bank’s financing to Portuguese lenders rose 0.2 percent in February from the previous month, a third consecutive increase.

ECB financing increased to 41.1 billion euros ($57.6 billion) from 41 billion euros in January, the Lisbon-based Bank of Portugal said on Monday on the BPStat portion of its website. ECB financing levels peaked at 49.1 billion euros in August.
Portuguese banks have increased their use of ECB funds as the government’s difficulties in coping with its debt and deficit helped squeeze their access to the interbank financing market. The country’s lenders have been trying to reduce their use of ECB funds, widening their options in raising short-term financing.
The spread between Portuguese and German 10-year government bond yields was at 426 basis points on Monday after reaching 484 on Nov. 11, a record since the euro’s introduction. Ireland in November became the second euro country to seek a bailout, after Greece, and the first to request aid from the European Financial Stability Facility. Portugal’s 10-year bond yield climbed to a euro-era record of 7.64 percent on Feb. 10.
--------Portugal’s biggest banks
Banco Espirito Santo SA, Portugal’s biggest publicly traded bank by market value, said it cut its borrowings from the ECB to 3.9 billion euros as of Dec. 31, a 2.8 billion-euro reduction from June. Banco BPI SA said it reduced financing to 1 billion euros from a peak of 3.5 billion euros in the first half of last year.
Banco Comercial Portugues SA’s ECB funding on Feb. 2 was 14 billion euros, down from about 14.5 billion to 14.6 billion euros in September, Chief Executive Officer Carlos Santos Ferreira said. State-owned Caixa Geral de Depositos SA said its ECB financing declined to 6.55 billion euros at year-end from 10.1 billion euros at the end of June. Santander Totta, the Portuguese unit of Banco Santander SA, had ECB funding of 4.3 billion euros at the end of last year.
Portugal’s debt agency said in December the nation intended to sell as much as 20 billion euros of bonds this year to finance its budget and redeem maturing debt. Portugal is implementing the deepest spending cuts in more than three decades, aiming to convince investors it can narrow its budget gap further and avoid a bailout after the Greek debt crisis led to a surge in borrowing costs.
(Source: Bloomberg)