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Portuguese Banks I
Banks
200
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190
180
170
160
150
140
130
120
110
Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12
---------- Stoxx Banks,
Analyst(s):
DJ Stoxx TMI rebased on sector
André Rodrigues Caixa-Banco de Investimento
andre.rodrigues@caixabi.pt
+351 21 389 68 39
Analyser
Exposure to ECB funds decreased EUR 889m in April to
EUR 54.43bn (-1.58% MoM)
The facts: According to Bank of Portugal the gross exposure of Portuguese
banks to ECB funds decreased 1.58% in April 2012 to EUR 54.43bn vs. EUR
56.32bn in March 2012.
Our analysis: We highlight that the exposure of Portuguese banks to ECB
funding reached its highest amount ever in March at EUR 56.32bn, surpassing
the EUR 49.1bn verified in August 2010 (previous maximum).
After that, it decreased in September 2010 (to EUR 40.3bn) and was almost
stabilized at c. EUR 40bn until March 2011. On April and May it increased
substantially to a level around EUR 48bn, following the country‟s request for
external financial support. In the most recent months (until March 2012) we had
witnessed stabilization around EUR 46bn.
April figures consolidate the amounts verified in March (although with a 1.58%
decrease) on the back of the two LTRO operations made available by ECB.
Besides, we underline that the average maturity of this ECB funding increased
in the last months, as the portion referring to medium and long term funds
increased to c. 94% in April 2012 vs. 58% in June 2011.
Exhibit 1: Portuguese banks – total funding via ECB scheme (EUR bn)
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Ago-07 Mar-08 Out-08 Mai-09 Dez-09 Jul-10 Fev-11 Set-11 Abr-12
Page 12 of 80 European Securities Network
Please refer to important disclaimer on the last page
Source: Bank of Portugal & CaixaBI Equity Research
Conclusion & Action: As referred in our last comments, ECB funding remains
(and should remain in the coming quarters) the last resource for Portuguese
banking system as we do not see conditions for Portuguese banks to
consistently return to wholesale markets soon.
In order to reduce its commercial gap, all the major Portuguese banks reinforced
its balance sheet reductions (lowering credit concession, optimizing RWA and
selling noncore assets). The use of ECB funds continues to represent almost
10.5% of Portuguese banks‟ total assets or c. 32% of Portuguese GDP.
According to the press, Portuguese banks obtained an amount close to EUR
20bn in February‟s LTRO. According to those sources, BES obtained EUR 5bn,
BCP close to EUR 7bn and Banco BPI close to EUR 2bn. Contrary to December
LTRO (where Portuguese banks mainly rolled over its short term ECB funds), in
this case banks increased its net exposure to ECB, as seen in March data.