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

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

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.

Recommended real estate
Buy in Portugal for 142500€

Sale flat in Oeirash 153 877 $

1 Bedroom

1 Bathroom

55 м²

Buy in Portugal for 129500€

Sale penthouse in Oeirash 139 839 $

1 Bedroom

1 Bathroom

61 м²

Buy in Portugal for 175000€

Sale flat in Oeirash 188 972 $

1 Bathroom

41 м²

Buy in Portugal for 205000€

Sale flat in Oeirash 221 367 $

2 Bedrooms

2 Bathrooms

108 м²

Buy in Portugal for 340000€

Sale flat in Lisbon with city view 367 146 $

2 Bedrooms

2 Bathrooms

107 м²

Buy in Portugal for 284000€

Sale flat in Lisbon with city view 306 675 $

1 Bedroom

1 Bathroom

38 м²

In this context, the Bank of Portugal will announce the period during which there is no expectation of an increase in this reserve,' the same information informs.

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.

Comment