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Eurozone Crisis Worsens On Portugal Deficit, Irish Bank Tests
The sovereign debt woes in the eurozone have intensified as Portugal reported a budget deficit for 2010 well above the target level, while stress tests for Irish banks showed a massive capital shortfall, according to Bloomberg.
The sovereign debt woes in the eurozone have intensified as Portugal reported a budget deficit for 2010 well above the target level, while stress tests for Irish banks showed a massive capital shortfall, according to Bloomberg. On Thursday, Portugal reported that its budget deficit for 2010 was 8.6% of gross domestic product, which is more than a full point above the 7.3% target that had been set by the government. The data increases the pressure for the country to seek international aid as borrowing costs surged on concerns that the target for a deficit of 4.6% of GDP for 2011 will not be reached. Giada Giani of Citigroup warned that Portugal is probably unable to access markets in the next few weeks and will probably need a bailout.
Meanwhile, the Central Bank of Ireland announced that the latest stress tests of the Irish banking system showed that the leading four banks would need to raise an additional 24 billion in capital. The results showed a capital shortfall of 13.3 billion for Allied Irish Bank and that the Bank of Ireland would need an additional 5.2 billion. Irish Life & Permanent and EBS Building Society need to raise the remaining 5.5 billion. Additionally, the countrys finance minister, Michael Noonan, unveiled a plan to Allied Irish and EBS that would see Irish Life sell its life assurance and investment management units and leave the government with a majority stake in the company.
Click here to read the story on the Portuguese deficit from Bloomberg News.
Click here for coverage of the Irish stress tests from Bloomberg News.