Bank of Portugal buys up over €11 billion in sovereign debt

BY LUSA

Over the course of 2015, the Bank of Portugal bought up €11.418 billion in Portuguese sovereign debt under the auspices of the European Central Bank program that saw its holdings triple year-on-year to close the year on €16.69 billion, according to the bank’s activities report released Monday.

"The acquisitions under the auspices of this new program, which seeks to stimulate the monetary and financial conditions necessary to driving consumption and investment in the Eurozone and, ultimately, to ensure appropriate levels of inflation, began in March 2015” with Portuguese state bonds purchased with a total value of €10.1 billion through to the end of the year the document detailed.

The Bank of Portugal portfolio also includes covered bonds, such as bank loans to the public sector, whilst excluding International Monetary Fund loans and bonds with maturities of less than two years.

In 2015, in order to compensate for the increase in bond purchases, the Bank of Portugal boosted provisions by €235 million and that now total in excess of €4 billion, up €1.58 billion since 2011.

In terms of its liabilities, the amount owed to the European Central Bank rose 12.9% to reach €61.71 billion with the central bank explaining this as stemming from “the financing of the acquisition of debt instruments held for purposes of monetary policy and aggregate to the notes in circulation that rose by 6% in 2015 to total €24.69 billion.

The Bank of Portugal also has a significant amount of gold in its reserves; at market prices, the value of this gold was down 1.5% year-on-year but still worth €11.9 billion and 10.2% of its total balance sheet.

As regards the location of these reserves, some €5.4 billion is held nationally, with €5.8 billion deposited with the Bank of England, €623 million with the Bank of International Settlements and with the United States Federal Reserve looking after €115 million in Portuguese bullion.