Banif bailout implies high cost for taxpayers: Bank of Portugal

The Bank of Portugal's Vice Governor Jose Ramalho admitted on Tuesday that the bailout of Banco International do Funchal (Banif) had meant a high cost for taxpayers.

"It is unquestioned that the resolution of Banif implied a high cost for Portuguese taxpayers, which penalizes us all," he said during an audition at the parliamentary commission of Banif, according to Portuguese Lusa News Agency.

"This decision was made by the Bank of Portugal in close articulation with the Finance Ministry and took into account the need to not put financial stability at risk, given Banif's structure of liabilities in which a larger scope of absorption of losses would hit creditors and unsecured depositors," Ramalho pointed out.

Portugal agreed to bail out Banif in December last year under a 2.2-billion-euro (2.5 billion U.S.dollars) package, just a year after the country had saved Banco Espirito Santo (BES) under a 4.9-billion-euro rescue program.

Recently, EU statistics agency Eurostat revealed that Portugal's public debt rose to 129 percent of GDP last year due to the Banif bailout, missing its deficit target of 2.7 percent.

The healthy assets of Banif were sold to Spanish bank Santander for 150 million euros.

Portugal only exited a 78-billion-euro bailout in 2014, with Portuguese taxpayers faced with large spending cuts and tax hikes.

Prime Minister Antonio Costa also recently admitted the bailout of Banif had meant a high cost for taxpayers, but said this was the only "definite" solution possible, and asked Brussels not to take this into account when considering Portugal's budget deficit threshold of 3.0 percent. (1 euro = 1.13 U.S. dollars) Endit