"I don’t know this proposal [from prime minister António Costa], so I cannot comment on it. What I can say is that something has to be done in Portugal to resolve the problem of banks", José Manuel Durão Barroso told the press on the sidelines of a conference in Lisbon.

Mr Barroso, also a former Portuguese prime minister justified the need saying that “the situation of Portuguese banks is still difficult despite all the efforts that have been made" and that is it "is in the interest of Portugal and Europe" to find a solution.

Portugal’s prime minister, António Costa, said on Sunday in an interview with radio station TSF and the DN newspaper that it would be "useful for the country to find a vehicle to resolve overdue loans ".

"I think it would be useful for the country to find a vehicle to resolve the overdue loans and free the financial system of a burden that makes it harder for it to participate more actively in the funding of Portuguese companies", he said.