Portuguese Parliament passes credit default name and shame list

Portugal’s parliament has approved a law proposal which will name and shame major debtors in default to banks which benefited from public bailouts.

 

The proposed law is supported by the left-wing Bloco Esquerda, PCP communist party and the right-wing CDS-PP. It has to be ratified by the President of the Republic to become law.

The law, if promulgated, would allow government enquiry commissions to access bank accounts and provide parliamentary hearings with information on credit default cases from banks which have received capitalisation handouts from the state or were subject to nationalisation, (partial or complete) or a winding up process.

The law will force the Bank of Portugal to annually publish a list of large debtors and the compilation of a special report on debtors whose defaults resulted in serious losses at institutions which are bailed out by the state.

The move comes after the Bank of Portugal consistently declined to provide vital information needed to assess bad practices undertaken by the Portuguese banking sector and led to the kind of disaster seen with the collapse of the Banco Espírito Santo group in 2015. 

It was also agreed to set up a specialised debt recovery unit on default loans without which it would be difficult to identify end destinations and beneficiaries, both inside Portugal and abroad, in cases of illegal capital flight, offshore deposits and capital laundering. (As for example in the cases of BES, BPN and Banif which were later written off as public losses).

The law will also name and shame ordinary individuals who default on loans of €2000 or over. Parliament has already passed a proposed law to allow the Portuguese tax authorities to insist on access to bank accounts with funds of over €50,000.