2016-07-08reuters.com

The ripples from Britain's decision to leave the European Union have spread across Europe to its southwestern edge, where Portugal is quietly struggling to contain a banking crisis.

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Political tensions in Europe have also deepened, with Rome and Lisbon trying to bend EU rules on helping laggard banks but meeting resistance from economic powerhouse Germany and the executive European Commission.

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A euro zone official who asked not be identified said Portugal's situation was as critical as Italy's but it was unlikely to be treated with leniency because it was smaller and posed no "systemic" threat to Europe's financial stability.

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Lisbon's 2-billion-euro ($2.22 billion) bailout of Banif Bank last year blew Portugal off course from EU spending targets, raising the threat of a penalty from Brussels.

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Alarm is growing because Portugal risks losing access to the European Central Bank's bond-buying program aimed at reviving economic growth in the euro zone, with only one rating agency still ranking it investment grade...

... German Finance Minister Wolfgang Schaeuble suggested last week that Portugal may need another international bailout to follow a three-year 78 billion-euro financial rescue package agreed with the EU and IMF in 2011.



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