Banco de Portugal started to monitor Portuguese banks’ leverage ratios more closely in pursuit of a medium-term convergence towards a more sustainable and stable financing structure. Recommendations were issued whenever leverage was considered excessive. Also, as mentioned, in September 2010 banks were advised to deleverage through the sale of non-core or non-strategic assets.
Money stock (M2 + CDs) continues to grow at around 2 percent on a year-on-year basis. As for funding costs for firms, short-term funding rates basically remain flat but long-term funding rates seem to be declining reflecting the developments in market interest rates. In this financial environment, the lending attitude of financial institutions and corporate financing conditions remain easy.