An official source close to the process told Reuters that the money will be used to support recapitalization and comes with an order that banks in the nation need to increase their core tier one capital ratios gradually.
According to the insider, lenders are required to raise this to nine per cent by the end of 2011, followed by a further escalation to ten per cent come the conclusion of 2012.
By taking temporary stakes in the financial institutions, the government will help the banks to recapitalize should they be unable to attain these targets, the news agency explained.
Portugal's prime minister Jose Socrates had earlier revealed that the government was to make a request for financial aid to the European Commission via a televised statement from Lisbon.
By Tony Aynsley