The "modest economic recovery will continue to support the country’s banks,” Moody’s said in relation to the outlook for the solvency of Portuguese banks in the next 12 to 18 months.

Moody’s said the Portuguese economy’s main weakness remained the high levels of debt of companies, families and the state, which continues to weigh upon economic activity and requests for loans.

"The Portuguese banks have the worst capitalisation in the Euro Zone, partly due to a large volume of assets on deferred taxes," said the agency.

The agency noted that unemployment continued to fall, to 10.8% in the second quarter.