May 30, 2013 / 11:24 AM / 5 years ago

Portugal BPI bank says EBA-set buffers counterproductive

LISBON, May 30 (Reuters) - Higher capital buffers against risk demanded by the European Banking Authority are counterproductive and should be recalculated to allow banks to reduce exposure to expensive state loans, the head of Portugal’s Banco BPI said on Thursday.

BPI’s CEO Fernando Ulrich also told a conference hosted by Reuters and Portugal’s TSF radio that tapping a recapitalisation line for banks from the country’s 78-billion-euro bailout had ended up “significantly penalising” bank earnings.

Ulrich said a recalculation of EBA-set buffers taking into account BPI’s current bond holdings should allow it to repay 782 million euros of some 900 million euros it still holds in state loans in the form of contingent convertible bonds carrying high interest payments.

“The EBA buffer is counterproductive and decapitalises the bank,” he said. (Reporting By Andrei Khalip; editing by Barry Moody)

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