Table I – Main Elements of the Portuguese Banking Legislation General Conditions Capital Requirements Interest Rates Cash Reserves Operations Credit Stock/Bonds holdings Entry in market Mergers & Acquisitions Opening of Branches Decree-Law 42,641, 12th November 1959 50 million escudos in Lisbon and Porto, and 20 million outside of the two cities for opening banks; 30 million escudos for incorporated banks already functioning in Lisbon or Porto, and 10 million for those functioning outside the two cities; 10 million escudos for banks in Lisbon and Porto; 5 million outside of the two cities Interest on demand deposits: 50% of the Banco de Portugal’s rediscount rate. Interest on loans: not more than 1.5% above that same rediscount rate. No limits on time deposits until 1965 (Decree-Law 46,492, 18 August): 1.25% for time deposits of less than one month; 2.5% for time deposits between 30 days and 90 days; 3.5% for deposits between 90 days and one year. Equal to at least 15% of demand deposits and of time deposits of less than one month; and 5% of time deposits of more than one month, with the remaining 85% backed by credit instruments of no more than three months’ maturity and no less than one year (slight changes until 1973, Valério, org., 2010) Forbidden to grant credit above 10% of the bank’s capital plus the reserve fund to one single firm or individual. This limit was raised to 30% if the collateral was constituted of public bonds; and to 20% if it had the form of bank guarantees. Forbidden to acquire stock of another firm in more than the reserve fund plus 20% of the capital of the bank; and could not exceed 20% of the capital of the firm. Dependent on authorisation by the Minister of Finance. Dependent on authorisation by the Minister of Finance. Dependent on authorisation by the Minister of Finance. Decree-Law 132-A/75, 14 March 1975 Nationalisation of commercial banks Decree 644/75, 15 November 1975 Set by the Bank of Portugal Set by the Bank of Portugal General Conditions Capital Requirements Interest Rates Cash Reserves Operations Credit Stock/Bonds holdings Entry in market Mergers & Acquisitions Branches
Decree-Law 729-F/75, 22 December 1975 Transformed nationalised banks into state-owned enterprises Decree-Law 729-H/75, 22 December 1975 Commercial banks can open accounts in foreign currency, as long as belonging to emigrants Constitution 1976 Forbade privatisation of all companies nationalised in 1975 (including commercial banks) The Constitution forbade entries in the market. Became an administrative issue, dependent on government decision. Became an administrative issue, dependent on government decision. Law 46/77, 8 July 1977 Sets the limits between the public and the private sectors of the economy (commercial banking is public) Decree-Law 353-O/77, 29 August 1977 Commercial banks can open accounts of but only of time deposits General Conditions Capital Requirements Interest Rates Cash Reserves Operations Credit Stock/Bonds holdings in market Mergers & Acquisitions Branches
Decree-Law 353-J/77, 29 August 1977 Commercial banks can grant medium- and long-run credit Decree-Law 137/79, 18 May 1979 Investment companies could be established Decree-Law 499/80, 20 October 1980 Regional Development Societies could be established Law 11/83, 16 August 1983 Authorised the Government to revise the between the public and the private sectors of the economy established by Law 46/77 Decree-Law 406/83, 19 November 1983 Opened commercial banking to private activity General Conditions Capital Requirements Interest Rates Cash Reserves Operations Credit Stock/Bonds holdings Entry in market Mergers & Acquisitions Branches Decree-Law 51/84, 11 February 1984 All banks had to be incorporated and with a minimum capital requirement of Dependent on the authorisation by the Minister of Finance. Dependent on the authorisation by the Minister of Finance. Dependent on the authorisation by the Minister of Finance.
1,5 billion escudos Decree-Law 246/85, 12 July 1985 Investment funds (real estate) could be established Decree-Law 17/86, 5 February 1986 Venture capital companies could be established Decree-Law 56/86, 18 March 1986 Factoring companies could be established Government Warning 5/88, 15 September 1988 Abolished limits to interest on loans, except mortgages Government Warning DD 2341, 18 March 1989 Abolished limits to interest rates on mortgages General Conditions Capital Requirements Interest Rates Cash Reserves Operations Credit Stock/Bonds holdings Entry in market Mergers & Acquisitions Branches Constitutional Law 1/89, 8 July 1989 Abolished the principle of irreversibility of the assets nationalised in 1975 and 1976 Government Warning 5/92, 20 May 1992 Abolished limits to interest