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In a joint press conference with Eurogroup chairman Jeroen Dijsselbloem on the 7th evaluation of the financial and economic assistance programme and banking union, Gaspar stressed that is “essential to realise all the elements of the banking union consistently and according to the calendar", which is already defined. Dijsselbloem said that he hopes the bank union can be in use in the middle of 2014.
The Minister of State and Finance added: "The fact that Portugal has accomplished so far its adjustment programme in an exemplar way, allows us to have high expectations that we will be able to finish this program in a sustainable way".
From the side of the European partners, the agreement will allow the positive conclusion of the seventh review and in turn the extension of the average maturities of the EFSM and EFSF loans by seven years, thereby significantly supporting the government's endeavour to return to full market access. The gradual restoration of credibility has already contributed to significant improvements, as exemplified by the recent issuance of a 10-year government bond in May.
It is expected that the return of the sovereign to the market will contribute to improve the overall financing conditions in Portugal. Nevertheless, further efforts are needed to reduce the excessive cost of bank finance and improve firms’ access to credit, in particular for SMEs. While progress in the banking union will be important for this, other European mechanisms could be used to provide financial support, including the EIB.
In its semi-annual Financial Stability Report, released on 28.5.13, the Bank of Portugal warned that, although their position has improved, Portuguese banks are still burdened by a high level of bad loans.
Bank of Portugal Financial Stability Report May 2013