Financial Crime World

Portuguese Banks Face Tough Regulations on Capital, Remuneration, and Customer Protection

Lisbon, Portugal - Ensuring Financial Stability and Protecting Consumers

The Portuguese Banking Authority (BoP) has implemented strict regulations for credit institutions operating in the country to ensure financial stability and protect consumers.

Capital Requirements

  • Banks must maintain adequate levels of capital and liquidity to withstand economic shocks.
  • The Capital Adequacy Ratio requires credit institutions to hold a minimum of:
    • 4.5% Common Equity Tier 1 (CET1) capital ratio
    • 6% Tier 1 capital ratio
    • 8% total capital ratio

In addition, banks must also comply with:

  • Liquidity Coverage Ratio (LCR): ensuring sufficient funds to meet obligations over a 30-day period.
  • Net Stable Funding Ratio (NSFR): ensuring stable funding sources.
  • Leverage ratio requirement: set at 3%, with an option for supervisory authorities to impose additional requirements.

Remuneration Policy Transparency

  • Banks are required to disclose information on their remuneration policy, including rules governing the compensation of management and supervisory board members.
  • This transparency aims to promote fair and sustainable compensation practices.

Customer Protection

  • To protect customers, banks must adhere to strict guidelines regarding:
    • Deposits: guaranteed up to €100,000 per depositor in the event of a bank failure (Deposit Guarantee Fund - FGD).
    • Financial intermediation: adoption of codes of conduct and clear information provision.
    • Investor protection: public disclosure of codes of conduct and clear information provision.

In case of complaints, customers can file directly with BoP through its website or by letter.

Institutional Investors

  • The Portuguese law defines institutional investors as entities that invest in securities, including:
    • Credit institutions
    • Investment companies
    • Insurance companies
    • Pension funds
    • Others
  • These entities are subject to specific regulations regarding their investments and obligations.

By implementing these stringent regulations, the Portuguese Banking Authority aims to ensure financial stability, protect consumers, and promote a healthy banking system in the country.