(Updates throughout with details)
LISBON Feb 8 (Reuters) - Millennium BCP, Portugal's largest listed bank by assets, reported a record net loss of 1.219 billion euros in 2012, hurt by sharp losses at its Greek business and impairments at home.
The result was slightly below expectations and came after a loss of 849 million euros in 2011. The bank said it had losses of 694 million euros at its Greek operation, which it is in talks to sell to Piraeus Bank.
The bank took an impairment charge of 290 million euros due to non-peforming loans, identified during an inspection of the bank's books under Portugal's bailout plan by the European Union and International Monetary Fund.
Millennium has been the hardest hit among the country's major banks by Portugal's debt crisis, because of loan impairments from its domestic business and losses in Greece.
There has been speculation that the bank is considering selling its Polish unit. Chief executive Nuno Amado told journalists that Poland "is very important, it is a strategic market for the bank."
The bank posted total net income of 236 million euros from its businesses in Poland, Angola and Mozambique.
Net interest income fell 35 percent to 1.024 billion euros, hit by falling interest rates and higher costs on deposits.
Millennium's two biggest domestic competitors -- Banco BPI and Banco Espirito Santo -- both jumped back to profit last year, thanks largely to sharp gains on their government bond holdings. Portuguese bonds rose last year on optimism the country will exit its bailout as planned.
The bank said it had gains of 106 million euros on government bonds last year, not enough to offset the Greek losses and impairments.
Millennium drew 3 billion euros in convertible bonds -- known as CoCos -- from a recapitalisation line included in the country's bailout last year. Analysts have said it remains unclear if BCP will be able to repay the CoCos fully by 2017 as planned or risk being nationalised.
Its shares fell 2.8 percent on Friday ahead of the release of the results, but they are up 42 percent since the start of the year on the back of growing optimism over the euro zone debt crisis and falling bond yields in Portugal. (Reporting By Sergio Goncalves, writing by Axel Bugge. Editing by Jane Merriman)