Thursday , January 28 2021

“The bank helped to avoid a credit crisis that would be dramatic” – Jornal Económico

The banking sector was part of a solution to help the Portuguese economy absorb the initial shock caused by the Covid-19 pandemic by avoiding a dangerous credit crisis, but it must ensure resilience, as it faces challenges such as increased credit losses. BdP) the governor said.

“We have a resilient financial system today and that was crucial to the speed and intensity of the measures adopted,” Centeno said at a conference in Lisbon. “With stronger capital and liquidity positions than in the previous financial crisis, the banking system helped to adapt to the initial shock of the pandemic, providing economic credit with the necessary credit and reducing disincentive pressures.”

The BdP governor stressed that “banks were part of the solution and were not part of the problem”.

“The banking sector has weathered the crisis quite well so far, despite the many risks and vulnerabilities that have clearly grown. It helped absorb the blow and prevented a credit crunch that would hurt the economy, I would say dramatic,” he said.

However, Mário Centeno warned that it is necessary to ensure the strength of the banking system, “because credit losses are likely.”

He recalled, on the one hand, that if banking institutions were to start supplying credit risks immediately, and therefore taking the right precautionary step, on the other hand, the banking system would continue to face profitability problems and respond to the challenges posed by digitalisation.

“The solutions to these challenges must not lie with each European country, but with a common focus. Financial institutions must play their part, responding decisively to the challenge and making decisions that do not forget the importance of their responsible contribution to the economy,” said the Finance Minister. former and former Eurogroup team chairman.

“But we cannot see the main structural weaknesses of the European banking system that were evident before this crisis,” he stressed. “It is necessary to continue to reduce overcapacity and improve profitability in the face of low profitability by looking for business models that respond to the increasingly digital economy.”

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