Portuguese banks borrow record amount from ECB

Banks in bailed-out Portugal borrowed a record amount from the European Central Bank in March, against a backdrop of rising debt in a sharply slowing economy, official data showed on Monday. The banks' ECB borrowings jumped to 56.3 billion euros ($73 billion) last month from 47.5 billion euros at end-February, the Bank of Portugal said. The previous record of 49.1 billion euros came in August 2010 as the eurozone debt crisis worsened after the EU and International Monetary Fund had to rescue Greece in May that year. The ECB began providing easy funding for the eurozone banks as the crisis deepened following that bailout and it has continued to offer money on generous terms so as to ease their liquidity problems. Other figures meanwhile from the Bank of Portugal showed that corporate bad debt hit 8.28 billion euros in February while sour loans to households totalled 4.87 billion euros. After Ireland in late 2010, Portugal itself needed an EU-IMF bailout in May 2011, adopting a series of tough austerity measures in return for the aid. The measures have hit activity badly, however, and last month the Bank of Portugal said the economy would now shrink 3.4 percent this year, worse than its previous estimate for a contraction of 3.1 percent. The economy shrank 1.6 percent last year.