The Bank of Portugal today disclosed the first global
results of the Special Inspections Program (SIP) conducted
as part of the measures and coordinated actions agreed by
the Portuguese authorities for the financial system, within
the scope of the Economic and Financial Assistance Program
established with the IMF/EU/ECB last May.
This Inspections Program covers the eight major Portuguese
banking groups, including Banco Comercial Português (BCP
Group), and aims to validate, with reference to 30 June
2011, the credit risk data used in assessing their
financial strength through an independent assessment of the
credit portfolios and the adequacy of risk management
policies and procedures, as well as the confirmation of the
calculation of capital requirements for credit risk.
The aggregate impact of these results in assessing the
solvency of the Group to 30 June 2011, taking into account
the existing prudential buffers on that date, would result
in a reduction of the Tier 1 ratio from 9.3% to 8.5%,
remaining above the 8% required minimum at that date.
The exercise focused on loans amounting to 55.4 billion
euros from the BCP Group's portfolio, corresponding to
72% of the total loan portfolio of the Group.
The inspection concluded that there is a need to increase
the impairment recorded in the consolidated accounts of the
group by 381 million euros. This represents 0.7% of the
loan portfolio analyzed and 16.0% of the impairment
recorded on this portfolio.
In the context of SIP, it was also ascertained the need to
make timely corrections to the value of risk-weighted
assets, which would imply an increase of 1.3% in the total
amount calculated for that date. It should be noted,
however, that legislative amendments applicable after the
reference date of the SIP, in particular the entry into
force in late 2011, with amendments to the EU legislation
(CRD III), will result in a reduction of risk weighted
assets, equivalent to 0.6% based on data from 30 June 2011.
These effects subsequent to June 30, 2011 were not taken
into account in estimating the impact of SIP in Tier 1.
The needs to strengthen capital requirements resulting from
the recommendations of SIP shall, in accordance with
guidelines of the Bank of Portugal, be met by June 2012 and
will therefore be addressed in the strategic capitalization
plan that the BCP Group will present in the beginning of
2012 and in which it will detail the measures to adopt to
meet the global needs for strengthening capital, including
those arising from the EBA exercise.
With regard to opportunities for improvements identified in
the policies and procedures followed in the credit risk
management, BCP will establish and present to the Bank of
Portugal a plan to resolve the short-term situations that
In this context, BCP also reports that during the second
half of 2011 the Bank maintained a high rate of
provisioning for impairment of its loan portfolio,
accounting for impairments made in this period, until
October, for the activity in Portugal, of about 174 million
euros. Additionally, as regards the adjustment of the value
of risk weighted assets, about 336 million euros from the
value identified was already incorporated in the capital
ratios reported to the Bank of Portugal, with reference to
the end of October.
Banco Comercial Português