Banks must start lending to companies says PM

 In News

Portugal’s banks need to start lending to companies again according to the country’s prime minister, António Costa.

In an interview with the TV station TVI, the socialist leader of the PS party and head of government said: “The banks cannot get used to just lending to consumers and families for home loans.

He accused the banking system of having a lack of appetite for risking loans in the business sector and to companies.

When asked if he was concerned at the excess of credit in the economy, he told the interviewer that he was worried about the lack of credit for productive investment.

“I have said that our banks are acting beyond what is normal when it comes to investing in companies.”

“The banks have to start taking more risks in terms of lending money to companies” he said adding that despite credit concession increasing, loans for the economy were shrinking and that this phenomena, despite being less acute than in the past, had continued.

According to statistics from the Bank of Portugal, up to July the total amount of credit in the economy topped €164.9Bn.

This amount represents a fall of 0.87% on the €166.3Bn registered at the end of last year, but also a reduction of 2.2% like-for-like (€168.6Bn).

However, in the case of home and personal loans, credit has shot up month-on-month  with the amount of loans to private individuals increasing in recent months.

Home and personal loans topped €92.85Bn by the end of July with mortgages representing the largest slice of the whole.

But according to BdP data, loans to companies continue to fall. This year loans to firms shrank 1.5%, on top of a fall of almost 4% in 2017.

Total loans to companies stood at €72.03Bn by July, an amount that falls short of the average recorded in recent years.

In 2017 it was €75Bn, in 2016 €80Bn, 2013 €100Bn and in 2011, the year the Troika intervened in Portugal’s economy, it was around €115Bn.