Banks need to have a financial cushion to mitigate risk in real estate.

Banks covered by the measure "have sufficient management reserves to introduce a provision for sectorial systemic risk". Under the new rules, banks will now have to set capital allowances on borrowers backed by residential mortgages, the Portuguese bank announced Wednesday.

This systemic risk reserve, which the banking regulator considers preventive, represents 4% of the loan portfolio granted to individuals backed by residential mortgages in Portugal. According to the Bank of Portugal's decision, banks will have to prepare this financial reserve by October 1, 2024, and then make changes every two years.

Banks, in particular BCP, BPI, Santander and Novo Banco (which use''can be used to support lending to the economy.

This reserve consists of Common Equity Tier 1 and can be applied to all risk positions or sectorally, i.e. to a subset of risk positions. The Portuguese bank's decision was taken after notification to the European Central Bank, "which had no objection to the proposal", and consultation with the National Financial Supervisory Authority, the European Systemic Risk Committee and the European Commission.