EU considers allowing bank recapitalization through ESM; Troika approves Portugal's bailout review (Barcelona) - Despite earlier declarations that there is no possibility of EU banks being recapitalized through ESM funds, Olli Rehn told reporters on Monday that Brussels is now considering this option.

EU Economic and Monetary Affairs Commissioner said that "this is not part of the ESM (bailout fund) treaty for the moment, in its present form, but we see that it is important to consider this alternative of direct bank recapitalisation as we are now moving on in the discussion on the possible ways and means to create a banking union.”

Meanwhile, the EU, ECB and IMF announced on Monday that Portugal has successfully passed the fourth quarterly revision of its bailout program. Despite difficulties, especially growing unemployment, the Portuguese government managed to meet Troika's bailout requirements.

Troika affirmed that Portugal’s aim to reach the deficit target of 4.5% GDP in 2012 remains viable, while the debt-to-GDP ratio in 2013 is expected to be higher, at 118%.

The positive outcome of the review means that the EU can release the next tranche of aid amounting to 4.1 billion euros. Portugal will most probably receive it in July. The next revision is scheduled for September 2012.

On Monday it was also made known that Portugal's largest banks will receive recapitalization funds of about 6.45 billion euros. The Portuguese government will allot for that purpose a part of the bailout money received from the Troika in 2013.