The minister then explained that the new budget involved a cash injection of €2.255 billion to finance the resolution of Banif, which would be split into direct aid of €1.766 billion and a €489 million loan to the Resolution Fund.


"This money comes from the state budget and shall reflect on the deficit for 2015 and as well as on future deficits to the extent that it further raises national debt" Centeno said before adding that this would not impact on Portugal’s position as regards coming out of the excessive deficit procedures currently implemented by Brussels.


Centeno said that everything had been done to seek out alternatives to a liquidation scenario but that "the time to resolve the situation of Banif had run out."


The Minister of Finance added that there was “some evidence” that the former Passos Coelho led government did not act due to the forthcoming election.


Centeno told journalists that the situation had been ongoing for three years with eight restructuring plans rejected in the meanwhile with “a clear lack of commitment of the (previous) government that objectively harmed the solution as it cut the options available and forced pressure onto the decision process.”


Prime Minister António Costa, speaking shortly after the sale of Banif’s remaining assets to Santander for €150 million and the state setting aside over €2 billion to cover the toxic liabilities, said the deal did come “at a very high cost” but was necessary “to defend the national interest.”


Costa said the state stepping in not only protected depositors and bank employee jobs but also ensured financial system stability that might otherwise severely impact on the economy, especially the Special Autonomous Regions of the Azores and Madeira, where the bank was clustered.


The prime minister also stressed that all deposits, whether belonging to residents or Portuguese emigrants, were thus also rendered safe.