The Portuguese government said Sunday that it will propose to parliament the nationalization of the Portuguese Bank of Business (BPN), which has a debt of 700 million euros (890 million U.S. dollars).
Finance Minister Fernando Teixeira dos Santos told a press conference after a special cabinet meeting that the government is to assure deposits in BPN.
According to Teixeira, the management of BPN will be given to the "Caixa Geral (State's cashbox) of Deposits" (CGD) under central bank the Bank of Portugal's supervision from Nov. 3.
The CGD will be in charge of managing and presenting a development plan to solve the BPN's problems.
Teixeira, standing beside the Bank of Portugal Governor Vitor Constancio, said BPN is not fulfilling the minimum level of solvency and "accumulated losses have brought about negative capital."
Both he and Constancio played down the speculation that more banks would be nationalized, saying that BPN is a separate case and it will not be taken to other banks.
The decision to intervene was due to the need to guarantee "a strong financial system and compete with the rest of Europe," they said.
Teixeria also announced that the government will inject some four billion euros (5.08 billion dollars) into the bank system through preferential shares to reinforce its solidity.
Source: Xinhua
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