Resetting the Portuguese economy

The main issues holding back the
Portuguese economy remain a lack of
market confidence and business liquidity,
but fundamental to a sustainable recovery
is the solidity of the country’s major banks,
says Paulo Câmara of Sérvulo &

“Portugal has traditionally been a bankcentred
economy and it is important that
the major domestic players perform well. It
is very much a structural thing. Many
banks are performing relatively well but
they remain cautious and there has been
no reduction in their risk assessment
profiles. “

The government’s rescue last year of
Banco Portuguñs de Negócios (BPN),
which had accumulated losses of €700m,
has proved more costly than anticipated
but the government has announced that it
will look for a purchaser in the first half of
2010 and recoup some of the money
invested, he says.

“Next year may see the beginning of the
end of the banking crisis for Portugal but
the challenge remains how to encourage
business growth. Many businesses are
adapting to the current reality but there is a
Paulo Cí¢mara
much higher level of due diligence being
performed in transactions and lending and
refinancing criteria remain very tight.”

Los principales obstáculos
que está se presentan en
la economí­a portuguesa
siguen siendo la falta de
confianza en el mercado y
el problema de liquidez en
las empresas, pero lo
fundamental para una
recuperación sostenible es
la solidez de los bancos,
comenta Paulo Cí¢mara de

There may also have been an upturn in
the performance of the stock markets but
volatility remains and retail investors are
still very much tainted by the crisis, believes
Cí¢mara. “There have been a number of
debt offerings, which are always considered
the first signs of a recovery, but successful
share and rights issues demand stability.”

Nonetheless he sees investment funds
doing positive business, open-ended real
estate funds have been consistently active
throughout the economic crisis, while
mutual funds too are beginning to
demonstrate growing interest in market

Next year may therefore see the
Portuguese economy being reset, he says. “We are anticipating some equity financing
and capital raising as well as the quiet
emergence of alternative investment funds
and new financing routes – despite the
prominence of Portugal’s banks, going
forward, we may however see less rigid
reliance on them by business or to
underwrite projects.”