NPL rates fall as banks unload their NPL backlogs. Several large transactions involving non-performing mortgages are expected for 2018/2019. Sill non-performing corporate loans still weight on banks’ balance sheets.

Presently, seven years after the beginning of the bailout program and four years after its end, the amount of Portuguese NPLs remains high despite the reorganisation of the banking sector and the steps taken to deleverage the economy.

In the wake of the European bank crisis fuelled by the Greek, Irish, Portuguese and Cyprus bailouts, the European banking authorities imposed more stringent stress tests on banks, ordered the strengthening of banks’ own funds and the contribution of shareholders and creditors for the recapitalisation of distressed banks.

However, the European bank resolution mechanisms do not respond to the apparently less critical situations where imbalances result from the difficulties in disposing of non-performing loans, which can become more serious when they reduce the liquidity of banking institutions and undermine the confidence of depositors.

As a result, public and private indebtedness in Portugal and in other European countries remains high and non-performing loans still weigh heavily on banks’ balance sheets.

In this briefing we review the main NPL market indicators and the steps given by the Portuguese authorities to reduce Portugal's NPL backlog. 

Read our full report here


In 2017 Portugal has transposed the Directive (EU) 2015/849 of the European Parliament and of the Council, on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Portuguese BOCR became effective on 1 October 2018.

Directive (EU) 2015/849 appeared as a new European Union (EU) effort to prevent money laundering and/or terrorist financing and to maintain the confidence in the Union's financial system.

The Directive aimed at increasing transparency in the identification of beneficial owners, requiring all Member States to hold information on beneficial owner of several legal entities in a national central register. The Directive entered into force on 26 June 2015, and all Member States were granted a two years deadline to transpose it into national law.

Law no. 83/2017, of 18 August (the “Money Laundering Law”) and Law no. 89/2017, of 21 August (the “Ultimate Beneficial Owner Law”) were responsible for transposing the Directive in Portugal. The later, which is already in force, establishes the legal framework for the Beneficial Owner Central Register (BOCR).

The BOCR emerged as a response to the need to identify any natural person who exercises ownership or control over a legal person in order to ensure effective transparency. The accurate information on the beneficial owner is a key factor in tracking money laundering criminals who might otherwise hide their identity behind a corporate structure.

The Money Laundering Law defines who are the beneficial owners of a legal person and the relevant criteria to presume it in case the main requirements are not possible to verify.

With the same purpose of preventing money laundering, the Portuguese Government has prohibited the issuing of bearer shares.

Decree no. 233/2018, of 21 August, which regulates the BOCR, establishing the form, term and publicity of the relevant information provided, has entered into force on 1 October 2018.


Despite biomass electricity production not showing a significant increase in recent years, the need to rearrange the forest sector and the new governmental plans will provide an opportunity for growth.

Portugal has proved to be one of the European leading countries as far as the investment on the production of renewable energies is concerned. In 2015, 28% of the energy consumed was produced by renewable sources. This means the country is the eighth largest among European countries and the fifth largest among countries that share the euro and is expected to reach 31% in 2020.

In 2016, 58% of the electricity produced in Portugal was generated by renewable sources. In 2017, it slightly decreased to 47%.

Taking into account 2017 most recent data, biomass represented 5.1% of the electricity produced in Portugal, wind power represented 21.6%, hydropower represented 15%, and solar power represented1.6%; the remaining 56.7% were still supported by fossil fuel.

The last 9 years witnessed an exponential growth of electricity generation capacity from biomass. Between 2008 and 2017, power increased from 454 MW to 735 MW, corresponding to an increase of 61,9% In turn, the biomass production of electricity increased by 66% since 2008, ranking the Portuguese current production by 3075 GWh per year.

The target set by the National Action Plan of Energy for 2020 (“PNAER 2020”) of 769 MW of biomass electricity generation capacity by 2020 has almost been fulfilled, although, since 2010 the generation capacity has only increased by 3%.

The Portuguese Government’s current policy aims to change this scenario by issuing new production licenses for biomass energy. Decree law 64/2017 establishes a special and extraordinary regime for the installation and operation of new municipally owned biomass power stations. Municipalities will be allowed to assign their management to public or private entities.

The present paper is intended to provide readers with an overview of this specific sub-sector of renewable energies that could benefit from the long-awaited political impulse regarding the reform of the forest sector.


PPP have allowed in the past Portuguese and foreign private entities to invest and operate healthcare infrastructures and facilities in Portugal, reducing public spending in new hospitals and improving the service and management levels of the Portuguese healthcare system.

The healthcare sector played  a relevant role in the establishment of Public/Private Partnerships (“PPPs”) in Portugal. It promoted new ways of sharing risk for healthcare care investments and new management experiences. It allowed private investors participation in the design, construction, financing and operation of hospital units within the National Healthcare Service (“SNS”).

Although the investment and operation of these units was undertaken by a private partner, SNS beneficiaries maintained the same access rights and privileges to clinical services as in any other public hospital.

On the other hand, PPP also had a positive impact on the running of the SNS by providing a benchmark for the operation of public hospitals.

All started with Amadora Sintra hospital, back in 1996. Unlike the other PPP’s that followed, all derived from the design, build, finance and operate model, the Amadora-Sintra hospital was built and financed by the SNS to be operated by a private company, José de Mello Saúde S.A., under a management and operation agreement.

The other Portuguese hospitals currently under a PPP regime are: (i) Loures Hospital (serving approximately 278,000 inhabitants), (ii) Braga Hospital (serving approximately 365,000 inhabitants), (iii) Cascais Hospital (serving approximately 285,000 inhabitants), and (iv) Vila Franca de Xira Hospital (serving approximately 245,000 inhabitants).

According to the Portuguese healthcare Regulatory Authority (Entidade Reguladora da Saúde), PPP hospitals have shown a high level of quality regarding to the services provided, with a special mention of the Hospital of Braga and the Hospital of Vila Franca de Xira.

On 1 August 2017, the Portuguese healthcare Secretary of State announced a new hospital in Lisbon, to be built as a PPP, establishing a possible new opportunity to interested healthcare industry private investors. The public tender for its construction is expected to be announced soon.


A concentration is the legal combination of two or more undertakings, by the merger between two or more undertakings or by the control acquisition, directly or indirectly, of the whole or parts of one or several other undertakings.

Law 19/2012, of 8 May 2012 (the “Competition Law”), which entered into in force on 8 July 2012 and repealed the former competition law, Law 18/2003, of 11 June 2003, establishes merger control rules applicable to concentrations having effects in Portugal.

The Competition Law brought relevant changes on merger control rules, particularly by (i) putting the merger substantive test in line with the Significant Impediment of Effective Competition (“SIEC”) test of the European merger rules; (ii) changing the turnover thresholds required for the notification to the Portuguese competition authority (Autoridade da Concorrência – the “Competition Authority”), including adding a new de minimis market share notification threshold, (iii) deleting the previous notification deadline, and (iv) amending some deadlines applicable to the merger procedure.

In order to prevent the risk of competition restrictions, the Competition Authority exercises control over planned concentrations with effects in the national market.

Following an assessment phase, the Competition Authority may approve the concentration, including upon the application of remedies to be carried out by the undertakings, or prohibit the transaction insofar as it creates significant impediments to effective competition in the national market, particularly in case of creation or reinforcement of a dominant position in the national market.

Undertakings that execute concentrations which have been suspended or prohibited by the Competition Authority may be subject to fines and the legal acts related to the transaction could be declared null and void. The maximum amount of the fine could be 10% of the aggregate annual turnover of the associated undertakings that have engaged in the prohibited behavior.

This paper reviews some of the most important legal aspects regarding merger control rules in Portugal.


This paper aims to provide an overview of the Portuguese Telecoms Market and its regulatory framework.

The sector’s revenues experienced a slight (-0,3%) decrease in 2016, as a result of an eight year recession period. Nevertheless, in 1Q2017, major operators reported a YoY revenue growth rates between 1,2% to 3,5%.

These figures show a trend for future stabilization in the market, in spite of the ongoing restructuring of the former incumbent and the uncertainty surrounding the appointment of the telecoms regulator’s new board.

Undeterred by the loss of almost one quarter of its revenues due to the financial crisis, the Portuguese communication’s market remains one of Europe’s most interesting in terms of new services and solutions.

As available data shows, liberalisation of the telecoms market had a vastly positive impact both in the sector, and in the economy, as Portugal is fairing particularly well  in comparison with its European Union counterparts in almost all of the market segments.

A more detailed analysis shows that the Portuguese market for traditional services – i.e. fixed and mobile voice and data – is highly concentrated, as Portugal’s three major operators, Altice, NOS and Vodafone, hold nearly 95% of the market shares.

As result of such an extremely high concentration rate, new competitors  are not expected to appear in the traditional sectors.

On the other hand, OTT providers are becoming an increasing threat to traditional operators, due to their very popular services which include instant messaging, live video, audio calls and video on demand.

Notwithstanding the telecoms market apparent hostility towards new entrants and its premature signs of recovery, new players, such as Altice, have still managed to successfully establish themselves as prominent players.

Moreover, Portugal has a widespread infrastructure and a large customer base, open to advanced and complex communication products and services, thus, creating interesting opportunities in this field.


Portuguese due diligence are generally similar to any other due diligence. There are, however, some legal features with an impact on the risk assessment of the potential buyer that should be considered in a due diligence of a Portuguese target company.

In general, a due diligence may comprise four main stages:

  • Drafting a checklist incorporating all information to be requested to the target;
  • Reviewing information and drafting a preliminary plan with the most relevant topics for each exposure area;
  • Drafting a preliminary report with the assessment of all relevant information/documentation;
  • Drafting a final report (after requesting other relevant data related to the business, if necessary);
  • and These stages are indicative and may vary on a case-by-case basis. In some cases, a due diligence process may even continue to be relevant in a post-closing term.

A due diligence process occurs throughout the proposed transaction, which may be concluded in a few weeks or months. 

An effective selection of all relevant information, limiting the scope of the matters related to the business, may be crucial for a due diligence to be carried out correctly and avoid undesirable surprises.

The length of a due diligence process may depend on several issues: (i) how much time and monetary resources the potential buyer may spend, (ii) the exposure areas to be covered (iii) the documentation/information to be reviewed, (iv) the need to hire specialized consultants and many other relevant business aspects.

Although there is no a preferred outcome, it is crucial that the collected information confirms the real situation of the target company. The target company may be subject to different regulatory obligations due to its nature or the nature of its business. The legal framework governing Portuguese companies and Portuguese law contracts, should be properly assessed.

This paper reviews the most relevant aspects in a due diligence of a Portuguese target and certain legal and regulatory aspects affecting Portuguese due diligences that should be considered by foreign buyers and their legal advisors.


Portugal is experiencing a persistent banking crisis that translates into high levels of non-performing loans.

The causes of this crisis are now clear: the slow growth of the economy, the excessive weight of the State, the high levels of public debt, corporate debt and individuals’ debt, which began in the nineties and accelerated without control in the first decade of the new millennium.

These factors combined with the global financial crisis of 2008 triggered a serious financial and economic crisis, which would culminate in the request for international aid in 2011.

Following the sovereign debt crisis in 2010, the European banking authorities have imposed more stringent stress tests, the strengthening of the banks’ own funds and the contributions of shareholders and creditors for the recapitalisation of distressed banks.

However, the bank resolution mechanism, now in force in Europe, does not respond to the less critical situations where imbalances result from the difficulties in disposing of non-performing loans, which can become more serious when they reduce the liquidity of banking institutions and undermine the confidence of depositors.

Six years following the Troika intervention and three years after the end of the Portuguese bailout program, the banking crisis continues despite the concentration of banks and the reorganisation of the sector.

Public and private indebtedness remains high and banks accumulate non-performing loans in their balance sheets and in vehicles they indirectly control.

The Portuguese government and international institutions, like the IMF, the OECD, the European Commission, the EBA and the ECB recognize the problem and agree that banks should be freed of non-performing loans. However, they do not agree on the urgency of the problem and on whether State and/or European intervention are needed. While the EBA, the IMF and the OECD have been advocating the creation of an European mechanism for the disposal of bad loans, the EU Commission and the ECB prefer a softer approach.


This presentation is intended for anyone considering Portugal as their new home, setting out the main aspects worth knowing and outlining the opportunities of living in Portugal

You’ll also find a description of the Residence Permit for Investment Activity programme (ARI) launched by the Portuguese Government, which has proven to be an easy  solution for investors from outside the Schengen who wish to obtain a residence permit in Portugal.

It includes rules on how non-EU citizens, who want to invest in Portugal, may obtain residence permits for investment purposes, known as “golden visas”.


As other European countries, Portugal has made several changes to its employment laws in the last few years and increased the flexibility of the legislation to attract foreign investment.

According to the World Economic Forum's Report 2016-2017, presently the Portuguese employment legislation is less rigid than that many European countries (for instance Germany and France), although still more rigid than that of the benchmark countries.

The labour reform approved in 2009 and the changes introduced after Portugal’s international bailout in 2011 have contributed to reduce the level of rigidity of employment rules. Nowadays Portugal is also better ranked in OECD´s Employment Protection Legislation Index.

Several aspects of the legislation have been revised since the adoption of the 2009 Labour Code, which adopted more employer-friendly legislation concerning the organisation of the workforce. For instance, working schedules may now be managed in a more flexible way without increasing the labour costs. The Labour Code also contains flexible rules that allow the employer to unilaterally change the place of employment and the employee’s functions.

According to the WEF Report, the changes in the labour regime has put Portugal 0.3 points behind the EU average, but ahead of larger European countries such as Spain and France.

After Portugal’s international bailout in 2011, Portugal simplified the termination procedures, reduced the severance pay, decreased the holiday leave period and suspended some public holidays.

Of course the elimination of some public holidays, rest days after overtime were not consensual, even though viewed as necessary by the Troika at the time.

After the general election of 2015, the suspension of the public holidays was removed in 2016 but no relevant changes to the labour legislation were made. Portugal believes that the system now strikes the right balance between securing employees’ acquired rights and benefits and the level of flexibility required by employers.

This translates into a low level of employment disputes. According to Pordata, an independent database of socioeconomic data, the average number of working days lost through industrial action by employee in 2014 was 1.7 against 1.1 in 2013, despite the harsh austerity measures imposed in Portugal in the last years.