Francisco Soares Machado, partner in the Finance and Governance department at Sérvulo since 2025, characterises the current moment in the Portuguese financial sector as very positive. In an interview with Advocatus, the former advisor to the Vice-President of the European Investment Bank and staffer to the Minister of Finance notes that national banking today presents high levels of capital and liquidity, record profits and profitability, low non-performing loans and low leverage, ranking above the European Union average on several indicators. Bank performance results from a combination of cyclical factors, such as political stability, fiscal responsibility and economic growth driven by tourism, real estate and technology, and structural factors, such as the merit of management teams in deleveraging, digital transformation and strengthening asset quality.
Regarding strategic challenges, Machado identifies digital transformation, combating payment fraud, integrating sustainability into risk management models and European regulation as the main areas of attention. The lawyer sees positively the initiatives of the European Commission and the ECB to promote sector competitiveness and simplify regulation, but argues that European consensus would be important to complete the missing pillar of the Banking Union. European regulation is transforming the business model of financial institutions, which devote as much time to compliance as to the business itself, which, according to Machado, brings benefits for institutions and positive externalities for society.
Regarding investment opportunities, Machado highlights that high bank valuations and barriers to granting new licenses create relevant opportunities for long-term investment. Recent examples include Fosun's sale of a stake in BCP, the sale of Novo Banco to BPCE and sale agreements for other banks. In alternative asset management, the market has grown exponentially, driven by an attractive tax regime and lower regulatory barriers, with several consolidation operations in recent months. However, Machado warns that Portugal should look to the European single market and internationalise, rather than limiting itself to the domestic market.
Regarding the future, Machado believes that banking activity will continue to be at the core of the Portuguese financial system, but anticipates great growth potential in investment funds, especially in debt funds, which can complement or replace banking for certain projects with lighter regulatory requirements. Financing of energy transition projects and infrastructure, as well as structured financing in general, are other areas with robust growth prospects. Digital transformation and regulatory changes in the capital markets should also allow greater prominence for entities such as investment firms and FinTechs.
