Portugal to propose nationalisation of BPN bank: minister

LISBON (AFP) - Portugal's government plans to propose to parliament the nationalisation of BPN bank, which has seen heavy losses amid the global financial crisis, the finance minister said Sunday.

"The government will propose to the Assembly of the Republic the nationalisation of BPN bank," Fernando Teixeira dos Santos told journalists of Banco Portugues de Negocios, which is not among the country's largest banks.

After nationalisation, it will be managed by state-owned Caixa Geral de Depositos, Portugal's largest bank, he added.

The Socialist government holds an absolute majority in parliament.

Dos Santos said the size of BPN's losses precluded the possibility of providing new aid to the bank.

"A solution proposed by the bank's current administration could not be accepted by the government because it would have involved an unjustifiable cost for taxpayers," he said.

According to dos Santos, an independent audit had shown the bank's total losses reaching some 700 million euros (900 million dollars).

BPN posted net profits of 56.7 million euros last year.

The announcement comes after the European Commission said Thursday it had approved Portugal's package to support the crisis-struck financial sector.

Portugal has offered 20 billion euros (26 billion dollars) in state guarantees to banks that struggle to meet their obligations due to the financial crisis.

Last month, Portugal's three big private banks said they were considering resorting to guarantees offered by the government to ensure their liquidity in the global financial crisis.

In a statement to the stock exchange, the country's biggest private bank BCP said it was likely "to seek the state's guarantee" to fund lending activities. Two other major banks, BES and BPI, said they were considering similar moves.