November 5, 2018 / 6:48 PM / 6 months ago

Portugal's Millennium bcp does better than average in bank tests

LISBON (Reuters) - Portugal’s largest listed bank, Millennium bcp (BCP.LS), said on Monday a European Union bank health check showed its solvency would deteriorate less than the average for the banks tested, while it also moved a step closer to resuming dividend payouts.

The European Banking Authority on Friday published the results of its stress test of 48 banks in the European Union to check how well their capital reserves could withstand a combination of theoretical market and economic shocks.

Millennium bcp said its common equity Tier 1 capital ratio would drop by 384 points to 9.14 percent under the hypothetical stress scenario. This would compare favorably to an average 410 basis points drop for the 48 banks tested, the bank said.

The bank suffered a long period of losses during the country’s debt crisis in 2010-14 under a heap of bad loans that nearly derailed Portugal’s banking system, but returned to profit in 2015 and has improved its solvency ratios since.

Millennium bcp, whose largest shareholder is China’s Fosun (0656.HK) with a 27 percent stake, has not paid dividends since 2011. In May, the bank said it was likely to resume dividend payouts from next year based on its 2018 results.

On Monday, Millennium bcp shareholders paved the way for future payouts by approving a reduction in the amount of the share capital by around 876 million euros ($999.95 million), without changing the number of shares. That sum is now deemed “distributable capital”.

Also on Monday, bcp’s Polish unit Bank Millennium (MILP.WA) agreed to buy Euro Bank for 1.83 billion zlotys ($484 million) from France’s Societe Generale (SOGN.PA), one of the lowest-scoring banks in the latest stress tests.

The deal ties in with the Portuguese bank’s plan to find new areas of growth.

Reporting By Andrei Khalip. Editing by Jane Merriman

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