LISBON--Portugal's government has finalized a capital injection
into three of the country's largest lenders, allowing them to meet
new requirements set by the European Banking Authority.
Last month, the Portuguese government said it would inject as
much as 6.65 billion euros ($8.42 billion) into the three banks so
they could meet a Core Tier 1 ratio of 9% and weather loan losses
that have risen amid the economic slowdown.
In a statement, the Finance Ministry confirmed it has already
provided EUR3 billion to Banco Comercial Portugues SA (BCP.LB) in
exchange for contingent convertible bonds.
The state could also inject a further EUR500 million into the
bank if shareholders don't participate in a capital raising
expected to be completed by September.
Banco BPI SA (BPI.LB), meanwhile, issued EUR1.5 billion in
contingent convertible bonds to the state. The bank has said it
plans to raise EUR200 million from shareholders by September and
immediately buy back some of the bonds from the government.
The so-called CoCos are sold as interest-bearing debt that has
to be paid back. But they convert to equity in the event that a
bank's capital ratios fall below certain levels.
Money for BCP and BPI was taken out of a EUR12 billion
recapitalization line under Portugal's EUR78 billion bailout
program.
State-owned Caixa Geral de Depositos has received EUR1.65
billion from the state, including EUR900 million from a CoCos
issuance, the ministry said.
Portugal's banks haven't been hit by a property bubble, as seen
in bailout peer Ireland or neighbor Spain. Instead, they have been
hard hit by Portugal's sovereign debt crisis and now rely heavily
on funding from the European Central Bank.
Write to Patricia Kowsmann at patricia.kowsmann@dowjones.com