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Portugal FM: Not enough cash to cover banks

Thursday 13 October 2011 - by Regulation Mutters

Paulo Portas - Photo by EC/Berlaymont

The Portuguese foreign minister apparently let slip a rather ominous secret on the Portuguese banking situation on Wednesday evening.

After giving an optimistic speech at the London School of Economics on Wednesday night, Paulo Portas ended with a rousing line: "We will deliver. We will deliver."

The FM discussed Portugal's "strong commitments" to austerity measures, saying it would hit fiscal targets "ahead of schedule".

He evaded a few controversial questions from journalists about Portugal's need for a larger bailout. Nevertheless, after the talk, a hedge fund investor who had made substantial losses in the Portuguese banking sector, approached the foreign minister to quiz him on the situation.

According to the investor, who spoke to the Mutterer straight afterward, Portas allegedly said that despite Portugal's commitments, its "on track" austerity programme and existing bailout funding, there is just "not enough to cover" Portuguese banks.

The investor did not seem too surprised. "I've been short on Portuguese banks for a while now!" he said.

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