The biggest banks in the country of Portugal have halted all repayment of loans worth 19 billion euros for six months, this is to help those people that have been greatly affected by the Corona Pandemic in the country and if extended further this will lead to a rise in the number of bad debts said the CEO.

The parliament was told during a parliamentary session on Tuesday and Wednesday that Suspension of the six months loan is applied to 190,000 loans, the CEO said that was done according to rules that are ordered by the government; however, there were concerns that if the country’s economy recovers quickly, then there will be further leniency for loan repayment.

The minister of economy, Pedro Siza Vieira announced in the month march 2020, that people who had lost their jobs due to the Corona Virus Pandemic and had housing loans, their loans would be laid off. And those who owed loans to companies their loans will be suspended from April till September.

This policy put in place may have to apply to loans that are worth 20 billion totals in euros

Those who owed banks money on the repayment of credit and had suffered a 20% loss in their income were given legal notice by banks to postpone their rental payments and the loans that they owed to the banks.

However, CEOs from some companies told the parliament that people would not be able to pay those loans by October, which meant that there would be a rise in bad debts since their clients may not be stable at that particular moment to resume payment. These companies include Millennium-BCP, Caixa General Depositors, Santander Totta, and Novo Banco.

These five banks put together have Portugal’s assets in the banking system of worth 80%-85%

Non-performing loans in Portuguese banks have been reduced to 17.2 billion euros last December 2019 from their previous peak, which was 50 billion euros as of June 2016. However, the ratio of bad loans in Portugal is 6.1% twice the average in Europe.

In the year 2019, the balance of loans was 234 billion euro

Marcelo Rebelo, who is the president of Portugal, Rui Rio leader of the opposition, and other leaders in politics have urged the banks to give support to the people through these hard times of the corona crisis. The president told the parliament during April 2020 that banks will have zero profit in the year 2020 and 2021 to show support to its people.

CEOs also raised concerns that during these hard times of the pandemic, banks will record heavy losses, and the president of Santander Totta approximated that this loss may range 2 billion up to billion in euros.

During this crisis of coronavirus pandemic, Banks are hardly going to benefit this were sentiments of Castro Almeida. Still, instead, he said that the banks are going to be the most affected industry with the plaque.

The IMF has said that Portugal could experience a slowdown of 8% in its economy; however, the minister of economy has said that the country has not experienced any relapse in its foreign investments.

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