An important point to make is that, as long as banks abide by their commitments, private management is preserved through the limited voting rights allocated to shares acquired by the State. A new framework for early intervention, resolution and deposit insurance is at the final stages of adoption, reinforcing Banco de Portugal’s powers in situations of financial distress.
The idea is to provide for two different categories of supervisory intervention into credit institutions: corrective early intervention and resolution. The type of intervention will depend on the severity of the problem, which will also determine the tools that Banco de Portugal may use. The insolvency law is also being amended with a view to facilitating the early rescue of viable firms.