Fitch said that given ongoing difficulties Portuguese issuers face in raising long term market funding, Montepio’s reliance on wholesale funding could further increase the bank's dependence on the European Central Bank or other short term funding sources. It added that the rating also reflects continued risk concentration in the real estate and construction sectors.
However, the rating agency noted Montepio’s good franchise in the residential mortgage market, low single name risk concentration, and sound and good quality capital base, with the bank has not having issued hybrid capital.
Fitch said the continued RWN is explained by a planned takeover bid for Finibanco Holding SGPS by Montepio’s owner, Montepio Geral - Associação Mutualista. The rating agency believes that if the takeover is successful the two entities will merge, at which time the RWN will be resolved.
Fitch said that if there is any impact from the rating action on the issuer’s covered bonds then it will detail these in a separate comment.