- Country to inject 2.7 billion euros into state-owned bank
- Government plans to convert 960 million euros of CoCo bonds
Portugal’s Finance Ministry said it got approval from the European Commission to inject as much as 2.7 billion euros ($3 billion) into state-owned Caixa Geral de Depositos SA, the country’s biggest bank by assets.
As part of the plan, the government will convert 960 million euros of contingent convertible bonds subscribed by the state into shares of the Lisbon-based lender to bolster capital buffers, the Finance Ministry said in a statement on Wednesday. Caixa Geral will also sell to private investors about 1 billion euros of debt instruments that are eligible to meet capital ratios.
While Portugal exited its three-year international bailout program in 2014, the government is seeking ways to lower bad loans that are undermining lending and economic growth. The country is among six European nations with a non-performing loan ratio exceeding 10 percent, according to the central bank.
The plan includes cost cuts and won’t be considered state aid, the ministry said.