Portugal's finance ministry and its resolution fund agreedto revise the terms of the state's loans to the fund, following a review, inorder to ensure financial stability and to help boost the capital levels ofdomestic banks.
The agreement will extend the maturities of the loans to thefund, enabling Portuguese banks to make payments to the fund at their regularcontributing levels, instead of making extraordinary payments.
The Portuguese Finance Ministry noted that the revisedterms, which were approved by the European Commission in principle, will see anew interest rate to be charged on the loans in line with what the countrycurrently pays on its bonds.
The fund received €3.9 billion from the government forrescuing Banco Espirito Santo in 2014, Reuters reported Sept. 28. The fund isowned by Portuguese banks which pay interest on the loan.