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TEXT-Fitch: Negative outlook for Portuguese Banks driven by sovereign; improved capitalisation

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(The following statement was released by the rating agency)

Oct 11 - Fitch Ratings says in a new report that its outlook for Portuguese banks isnegative. The agency acknowledges the progress made to end-H112 by the major Portuguese banks oncapitalisation and retail funding but also recognises the challenges and risks ahead, which arestill highly correlated with sovereign developments.

The Outlooks on the Long-Term Issuer Default Ratings (LT IDRs) of the major rated Portuguesebanks are Negative. The LT IDRs of Caixa Geral de Depositos (CGD), Banco ComercialPortugues (Millennium bcp) and Banco BPI are at their Support Rating Floor (SRF) basedon Fitch's assumption that the sovereign and/or international authorities would provide supportif needed. The Negative Outlook mirrors that on the sovereign ('BB+'/Negative). Any furtherdowngrade of Portugal's sovereign rating would trigger a downgrade of the major Portuguesebanks' IDRs and SRFs.