PORTUGAL Trends and Developments Contributed by: Rodrigo Formigal, João Diogo Barbosa and António Kreiseler de Albuquerque, Abreu Advogados
er sectors begin bundling financial services with their own, banks will ideally allow customers to choose a more need-centred approach. In terms of regulation, governments and regu - lating bodies are required to shift entirely their way of identifying and managing risks. There is a move towards a focus on the outcome, rath - er than monitoring the activities of institutions. Equally, this regulation may become progres - sively more dependent on AI, personal data and the blockchain. Digital Banking is starting to impact the Portu - guese market, with increased focus on conveni - ence for costumers, competition amongst credit institutions – that are being forced to diversify their services and utilise automation and fintech – and a bigger awareness on cybersecurity and protection of personal data. Basel III The recently published CRD VI and the CRR III will fully integrate the Basel III framework and have been thoroughly reviewed by local institu - tions. While the CRD VI must be transposed only by 10 January 2026, the CRR III enters into force from 1 January 2025. Besides the implementation of Basel III final reforms, and confirmation of the banks’ internal risk measurement to yield, the European banking package will also bring forward: • the introduction of an output floor to reduce excessive variability of banks’ capital require - ments calculated with internal models; • the implementation of the agreement to strengthen EU’s banks’ resilience to face credit, market and operational risks • the strengthening of provisions related to ESG risks;
• clearer rules for third-country banks operating in the EU; and • a stronger supervision and governance, requiring a proper assessment for bank man - agers. One notable change is the introduction of a new notification and approval requirement for corpo - rate transactions involving acquisition of material holdings by institutions, financial holding com - panies and mixed financial holding companies or mergers or divisions of the aforementioned entities. There has not been any public discussion on the legislative implementation of both acts in the Portuguese banking framework yet, but in- scope institutions have already started to adapt their internal organisation in light of the existing rules, given the tight deadline for entry into force. In addition to the Basel III reform of capital requirements within CRR III, the CRD VI fore - sees an amended framework for third-country banks to operate within the European Union, including through branches, as well as a review of supervisory powers and the introduction of ESG criteria in internal policies and procedures of in-scope institutions. The proposed changes, when transposed into national law (hopefully in 2025), will force the industry to once again adapt its structures to ensure compliance. Revision of the Countercyclical Capital Reserve in Portugal The Bank of Portugal has launched an official public consultation to revise the countercyclical capital reserve in Portugal, to allow for a gradual increase in the reserve of releasable capital, that would allow the mitigation of losses resulting from unforeseen system shocks, without sig - nificantly restricting the granting of credit. The
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