PortuguesePrime Minister António Costa has proposed the creation of a bad bank to aid thePortuguese banking system, TSF Rádio Notícias reported April 9.

Theremoval of nonperforming loans from the banks' balance sheets would allow themto become more active in the financing of Portuguese companies, the radiostation cited Costa as saying.

Costadid not explain how such a bad bank would be created, if it would affect thecountry's finances, or whether or not Portugal would need external financialsupport to resolve the asset quality issues of the country's banking system.