The Portuguese banking groups (CGD, BCP, BPI and ESFG) subject to the capital exercise promoted by the European Banking Authority (EBA) have recently increased their Core Tier 1 capital by a total of €7.4 billion.

With these capital increases the banking groups in question have fully complied with the Core Tier 1 capital requirements (9% minimum ratio) set out by EBA for the end of June 2012.

These capital increases have allowed the said banking groups to bring their Core Tier 1 ratios, calculated according to Banco de Portugal’s definition, to levels above 10%, which is the minimum required from 31 December 2012.

On 8 December 2011 EBA issued a recommendation to banking groups subject to this authority’s 'stress test’ exercise, aiming at reinforcing their respective capital levels to attain a 9% Core Tier 1 ratio by 30 June 2012. This ratio must be met using a prudent assessment at market prices of the sovereign debt exposures held on 30 September 2011, with no variation due to changes in the institutions’ bond portfolio. This decision aimed at creating a temporary capital buffer and, as a consequence, reinforcing the soundness of institutions, given the current uncertainty surrounding the sovereign debt crisis.

For the participating Portuguese banking groups (CGD, BCP, BPI and ESFG), the exercise indicated Core Tier 1 capital enhancement needs of €3.7 billion resulting from the assessment at market prices of sovereign debt exposures. In addition to this, capital enhancement needs amounting to €3.2 billion are required, in order to reach the target set by EBA of a 9% Core Tier 1 ratio.

Lisbon, 29 June 2012
(1) The Core Tier 1 concept adopted by EBA involves core capital additional deductions versus the Core Tier 1 ratio as defined by Banco de Portugal, notably those related to participations in financial institutions.