June 24, 2020 / 12:03 PM / 2 months ago

Bank of Portugal warns of significant pandemic impact on banks

LISBON, June 24 (Reuters) - Portuguese banks are likely to suffer a significant impact from the coronavirus pandemic and its economic fallout, the Bank of Portugal warned on Wednesday, expecting pressures from higher public debt and a weaker real estate market on the banking sector.

It said that despite big improvements in solvency ratios and liquidity since the 2010-14 crisis in Portugal, as well as a strong reduction in banks’ bad loans, capital ratios were still among the European Union’s lowest and corporate debt levels were still high.

“A significant impact is to be expected on the Portuguese financial sector from the pandemic crisis, which constitutes a resilience test for the sector,” the central bank said in its financial stability report. (Reporting by Sergio Goncalves, writing by Andrei Khalip, Editing by Victoria Waldersee)

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