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In the last 12 months, Portugal was the second largest country in the European Union to record a more pronounced decline in the poor credit rating of banks. This trend has been observed over most of the continent and, according to the European Commission, is expected to contribute to debt reduction. to convince the most skeptical countries, such as Germany, to complete the banking union and to accept increased risk sharing in the euro area.
The data are presented in the third report of the European executive on progress made in the reduction of bad loans published Wednesday. In the European Union as a whole, bad credit (where the bank bears a serious risk of non-payment) now accounts for 3.4% of total loans granted in the second quarter of this year, 4.6% during the same period of the previous year.
However, and this is the concern of European leaders, there are many differences between countries. Some national banking sectors, such as Portugal, still have very low credit levels. The good news that the Commission is trying to convey in this report is that, in these countries, the ratio has also decreased again. And Portugal has stood out.
In domestic banks, this indicator rose from 15.5% in the second quarter of 2017 to 11.7% in the second quarter of 2018, a decrease of 3.8 percentage points, making it the second most pronounced the whole of the European Union.
Only Cyprus lost 5.3 points (from 33.4% to 28.1%). In Greece, the country with the highest value (44.9%), the decline was two points. And in Italy, where the financial sector is very much in the eurozone, the bad debt ratio has risen from 12.2% to 10%.
At this level, Portugal has thus approached the level of Italy but remained with a higher ratio, thus preserving the third place of the ranking (behind Greece and Cyprus) among the countries with a level of poverty more worrying . European Union.
Elisa Ferreira, Vice Governor of the Bank of Portugal, said this week that "the problem of poverty [em Portugal] is confined, regulated, controlled "and is confident that a resolution may occur" in a relatively short period of time ".
For the European Commission, this report is mainly intended to send a message to the European leaders who will meet in December and who will have to decide on the measures to be taken in the context of the reform of the monetary union, a process which takes into account the conclusion of the banking union. fundamental.
In this respect, the most reluctant countries to make progress on issues such as the creation of a common deposit insurance at European level have argued that before assuming a greater risk spread, existing risks should be minimized. . In particular, countries such as Germany, the Netherlands and Finland do not feel comfortable assuming the responsibility to deal with future bank failures when the current scenario suggests the future. existence of significant weaknesses in the financial systems of some countries, high level of bad credit.
In this report, the Commission tries to show the different governments that the progress made so far has been considerable and that it is necessary to take measures to share the risks. While it considers that the problem remains "difficult" in some countries, the report states that "risk reduction in the EU banking sector continues at a steady pace and significant progress continues to be made". According to the Commission, this is a contribution to the discussions that will take place at the next summit. She warns that progress towards the conclusion of the banking union is "urgent" and "should be made in parallel with those aimed at reducing risks".
Major advances in this area, however, are already considered unlikely. Germany and France have agreed on some issues, such as providing a guarantee for the settlement mechanism, but have chosen to leave important decisions on the common deposit guarantee.
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