LISBON: The Portuguese state agreed on Sunday to sell troubled bank Banif to the local unit of Spain's Santander for 150 million euros in a complex deal that involves heavy costs for the state and the country's banks worth over 2.2 billion euros.
The Bank of Portugal said that the deal agreed with Santander Totta, Portuguese and European authorities allowed to safeguard financial stability, deposits and senior debt of Banif, as it involved an injection of 2.255 billion euros "to cover future contingencies".
Portugal's Bank Resolution Fund, to which all financial institutions working in Portugal have to contribute, will provide 489 million euros, while the remaining 1.766 billion euros would come directly from state coffers.
Prime Minister Antonio Costa, whose Socialist government took over earlier this month, said a in a late-night televised statement that the costs of the resolution are very high for taxpayers, but this was the only legally possible solution to protect depositors and financial stability.
The small Madeira-based bank has a market capitalisation of 91 million euros ($98 million) and had deposits of 6 billion euros at the end of September.
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