The Bank of Portugal, in the exercise of its powers as a national macroprudential authority, has identified eight institutions as “other institutions of systemic importance”.

In a statement, the regulatory body revealed that a reserve of private funds would be applied to institutions identified as “other institutions of systemic importance.”

For each O-SII, Banco de Portugal has also determined their respective funds reserve requirements, expressed as a percentage of the total amount of risk exposure.

This reserve shall consist of Tier 1 common stock capital.

The eight banks are BCP, CGD, Santander Totta and Novobanco, and their shareholders are LSF Nani Investments, BPI, Banco Montepio and Caixa Central de Crédito Agrícola Mútuo.

The Banque Centrale Populaire, as a systemically important bank, must have a capital reserve of 1.000%, as of January 1, 2024. The CGD, on the same date, will have to have a reserve of 0.750%. In contrast, Santander Totta must have a 0.500% reserve in Tier 1 capital. The same level is required of Novobanco and BPI.

As for Crédito Agrícola and Banco Montepio, this percentage is 0.250%.

The only institution required to hold its own funds over a different period of time is LSF Nani Investments, of Lone Star, which owns 75% of Novobanco. This entity has to have a capital reserve of 0.250% to be met only on July 1, 2024. But on July 1, 2025, it must have a capital reserve of 0.500%.

This decision was taken by Board deliberation on 31 October 2023, after notifying the European Central Bank and consulting with the National Council of Financial Supervisors, which did not object to the Bank of Portugal’s proposal. Within the scope of the prior interested party hearing procedures, the institutions identified as O-SII also did not raise any objections to the proposal.

The decision to reserve O-SII is reviewed at least annually.