Portugal's banking sector suffered another humiliating blow today as Moody’s cut its rating for Montepio (Caixa Económica Montepio Geral) by two levels, from B1 to B3.
This means the bank now is categorised as a ‘speculative investment,’ or ‘junk’ and is just one level above being considered a 'substantial debt risk.’
The high street lender is deemed unable to take any shocks to its system, despite a recent capital increase of €270 million.
"At the end of March 2016, Montepio’s bad debt had increased to 15.3%, significantly above the 12% reported a year earlier which was the financial system’s average at the end of last year," noted the agency.
By cutting Montepio’s rating, Moody's also took into account the "very limited capacity of the bank to generate recurring profits," and that the Montepio has a load of property assets acquired by the bank over the past few years which are affecting its performance.
Montepio issued a weak statement to the Stock market Regulator CMVM, claiming a recent rationalisation of the bank’s operational structure will yield benefits "in the medium term."
It does not help that the bank made a €242 million loss in 2015, worse even than the €185 million loss in 2014.
