IMF Staff Country Reports

Banco de Portugal (BdP)’s framework for supervising Less Significant Institutions (LSI) is robust and aligned with Single Supervisory Mechanism (SSM) methodologies; its continuous effectiveness will depend on BdP’s ability to sustain supervisory capacity. Alongside SSM membership, BdP has strengthened supervision through structured SREP assessments, broader and improved on-site inspections, digital tools for consistency and traceability, and stronger oversight of core risks. A commitment to ongoing improvement and collaboration, increasingly evident over the past decade, has driven these advancements, supported by a collegial approach to decision-making, established delegations, transparent internal communication, and integrity. Portugal illustrates how SSM methodologies have strengthened national supervisory practices. At the same time, structural pressures are emerging as BdP’s mandates expand under DORA, MiCAR, and the forthcoming AI Act: high turnover is straining BdP’s ability to retain and attract mid-career supervisors and risk specialists, particularly in ICT risk, the main short-term threat to supervisory effectiveness.