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Economy and Banking Sector of Portugal

Portugal
Location
Southwestern Europe
Population  (2016)
10 341 330  (0.00%)
EU Status
member since 1986
Currency
EUR (Euro)
Nominal GDP (2016)
184.9 bln EUR  (+0.03%)
Credit Ratings (as of Sep 2016)
BB+/Ba1
Consolidated Banking Assets (2015)
408.12 bln EUR  (-4.19%)
Deposit Guarantee
100 000 EUR
Number of Banks
150

Portugal is a developed country in Southwestern Europe (Iberian peninsula), a member of the European Union since 1986.

Portugal is a developed country with a high-income advanced economy and a high living standard. In the recent decades Portugal has become a diversified and increasingly service-based economy. Main industries of the Portuguese economy include automotive, aerospace, electronics and textiles as well as textiles, clothing, footwear, wood and cork.

In 2010-2013 Portugal suffered a financial crisis, among the other reasons resulted from the collapse of Banco Português de Negócios (BPN) and the bankruptcy of Banco Privado Português (BPP). In 2011 Portugal received a financial bailout from International Monetary Fund and the European Union. In August 2014 the largest bank in Portugal, Banco Espirito Santo (BES) went bankrupt. Currently Portuguese banking sector is dominated by domestic banks with a number of foreign-controlled banks operating in Portugal.

List of Banks in Portugal

National Currency

Euro (EUR)

Portugal joined the Euro Area on 1 January 1999.

GDP

Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
184.9 bln EUR  (+0.03%)17 900 EUR  (+0.03%)1.4 %  (2015: 1.5 %)

According to Eurostat, nominal GDP of Portugal in 2016 was 184.9 bln EUR.

Portugal underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.4% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 1.4% which was below the Euro Area average (1.8%) and below the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Portugal. Chart 1. Real GDP Growth in Portugal. Source: Eurostat, International Monetary Fund.

In 2016, nominal GDP per capita in Portugal was 17 900 EUR.

Portugal has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -17.2% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2022 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Portugal; European Union = 100. Chart 2. GDP Per Capita at Purchasing Power Parity in Portugal; European Union = 100.

Inflation Rate

CPI, MoM (Mar 2017)CPI, YoY (Mar 2017)CPI, Year Average (2016)
2.0 %  (Feb 2017: -0.2 %)1.4 %  (Feb 2017: 1.6 %)0.6 %  (2015: 0.5 %)

According to Eurostat, inflation rate in Portugal in 2016 expressed as annual percentages of average consumer prices was 0.6% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Portugal. Chart 3. Inflation Rate in Portugal. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2016)
11.2 %  (2015: 12.6 %)

Government Bond Yield

Government Bond Yield (Mar 2017)
3.99 %  (Feb 2017: 4.04 %)
According to Eurostat, government bond yield in Portugal in Mar 2017 was 3.99%, compared to 4.04% in Feb 2017.
Government bond yield of Portugal. Chart 4. Government bond yield of Portugal. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
BB+ (speculative), outlook stable Ba1 (non-investment grade speculative), outlook stable

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Portugal: 67 Signed Agreements

Portugal signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Algeria
 Austria
 Belgium
 Brazil
 Bulgaria
 Canada
 Cape Verde
 Chile
 China
 Cuba
 Cyprus (Aug 2013)
 Czech Republic
 Denmark
 Estonia
 Finland
 France
 Germany
 Greece
 Guinea-Bissau
 Hong Kong
 Hungary
 Iceland
 India
 Indonesia
 Ireland
 Israel
 Italy
 Japan (Jul 2013)
 Korea, Republic of
 Kuwait (Dec 2013)
 Latvia
 Lithuania
 Luxembourg
 Macau
 Malta
 Mexico
 Moldova, Republic of
 Morocco
 Mozambique
 Netherlands
 Norway
 Pakistan
 Panama
 Peru (Apr 2014)
 Poland
 Qatar (Apr 2014)
 Romania
 Russian Federation
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 Tunisia
 Turkey
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uruguay
 Venezuela

There are also several agreements between Portugal and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Barbados
 Colombia
 Georgia
 San Marino

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Exchange on Request: 16 Signed Agreements

Portugal signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Andorra
 Bermuda
 Cayman Islands
 Gibraltar
 Isle of Man
 Jersey
 Saint Lucia
 Turks and Caicos Islands

There are also several agreements between Portugal and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Anguilla
 Antigua and Barbuda
 Belize
 British Virgin Islands
 Dominica
 Guernsey
 Liberia
 Saint Kitts and Nevis

Automatic Exchange: Starts in September 2017

Portugal signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Portugal
IGA in effect since 06 August 2015, Model 1

Portugal has FATCA agreement with the U.S. in effect since 06 August 2015 (Intergovernmental Agreement Model 1). Financial institutions operating in Portugal are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Portuguese financial accounts hold in U.S. financial institutions will be reported to Portuguese authorities.

Further Information

Financial Market Development

Financial Market Development
3.3 (max 7.0), 116th out of 138 countries
Banks' Soundness
3.3 (max 7.0), 129th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Portugal is scored 3.3 out of maximum 7.0 and ranked 116th out of 138 analysed economies. Soundness of banks is scored 3.3 bringing Portugal into the 129th place, trustworthiness and confidence of financial market is scored 2.9 (133rd place).

Financial Market Development in Portugal. Chart 5. Financial Market Development in Portugal. Source: WEF.

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Portugal are summarised in Table 1.

Scheme Participantsall credit institutions operating in Portugal, branches of non-EU banks, branches of Portuguese banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Covered Accountsany type of deposit, certificates of deposit
Covered Currenciesall
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 1. Deposit guarantee scheme in Portugal.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Euro) Foreign Currency
A1 (upper medium grade) A1 (upper medium grade)

Local currency (Euro) deposit ceiling for Portugal is set to A1 (upper medium grade), foreign currency deposit ceiling is A1 (upper medium grade).

Deposit Rates

Average Deposit Rate (Feb 2017, EUR)
0.30 % (unchanged)
In Feb 2017, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.30% which was below the Euro Area average (0.43%).
Deposit Rates in Portugal. Chart 6. Deposit Rates in Portugal. Source: ECB.

Further Information

Banking Sector Structure

Number of Banks
150
Consolidated Assets (2015)
408.12 bln EUR  (-4.19%)
Recent Changes (2016)
new banks: 3, closed banks: 1

Currently there are 150 credit institutions operating in Portugal.

In 2015 consolidated banking assets in Portugal were 408.12 bln EUR. The consolidated banking assets' evolution is shown at Chart 7 below.

Consolidated banking assets in Portugal. Chart 7. Consolidated banking assets in Portugal.

Recent structural changes (2013 - 2016) of the banking sector of Portugal are summarised in Table 2.

2013201420152016
Number of Opened Banks3113
Number of Closed Banks1441

Table 2. Recent structural changes in the banking sector of Portugal.

The list of the most recently opened banks in Portugal is provided in Table 3.

All the credit institutions operating in Portugal can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Banks33
Branches of foreign banks23
Central banks1
Cooperative banks89
Savings banks4

Table 4. Number of banks by category in Portugal.

There are 23 branches of foreign banks from 10 different countries in Portugal. Table 5 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 France6
 Spain4
 Germany3
 United Kingdom3
 Luxembourg2
 Ireland1
 Switzerland1
 Netherlands1
 Hungary1
 Austria1

Table 5. Number of branches of foreign banks in Portugal grouped by country of origin.

Time Deposit Accounts

Minimal Interest Rate
0.20 %
Maximum Interest Rate
1.85 %
51 offers from 5 banks