# Portugal Banks Withstand Stress as Property Risks Draw Scrutiny

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/30924
Published: 2026-10-13T08:06:31.000Z
Updated: 2026-10-13T08:06:31.000Z
Section: Regulation

> Portugal’s first Financial Sector Assessment Program in 20 years found moderate financial-stability risks and urged stronger cyber-risk and crisis-management frameworks.

Portugal’s banking system remained resilient under severe stress scenarios, but rising property prices, faster mortgage lending and concentrated sovereign exposures are adding pressure to the country’s financial-stability framework.

Portugal’s 2026 Financial Sector Assessment Program was the country’s first in 20 years, following its previous assessment in 2006. The review found moderate financial-stability risks and highlighted changes since the global financial crisis, the sovereign-debt crisis, the COVID-19 pandemic and the creation of the European banking union.

Portuguese banks reported a common equity Tier 1 ratio of 17.7% at the end of September 2025. Banking-sector assets accounted for 65% of Portugal’s €775 billion financial system, equivalent to 165% of gross domestic product.

Spanish bank subsidiaries represented 23% of Portugal’s banking assets. Banks’ direct exposures to nonbank financial institutions equaled 3.9% of total assets, while funding from those institutions accounted for 3.9% of total liabilities at the end of March 2025.

The assessment identified rapidly rising real-estate prices and accelerating mortgage lending as risks requiring close monitoring. Concentrated sovereign-debt exposures also warranted vigilance, even as banks maintained capital and liquidity positions that supported resilience under severe adverse scenarios.

Banco de Portugal activated a positive cycle-neutral countercyclical capital-buffer target of 0.75% in January 2026. Portuguese authorities have used loan-to-value and debt-service-to-income limits as recommendations for banks since 2018.

The findings called for more consistent supervision, stronger data-sharing and better coordination on cyber risk. They also supported reforms to crisis-management arrangements and improvements to the deposit-insurance fund and liquidity backstop.

Álvaro Santos Pereira, governor of Banco de Portugal, opened a conference on the findings in Lisbon on Sept. 22. “Financial stability may sometimes seem abstract, but its effect on people’s lives is very real,” Pereira said. “Strong institutions are strengthened, not weakened, by scrutiny.”