The Governor of the Bank of Portugal, Carlos Costa, today has been moaning about politicians, saying that they demand that banks don’t take risks, while at the same time insisting that they should refinance the economy by lending to companies.
Costa says that “we live contradictory times in relation to the management and evaluation of risks” thus displaying his continuing lack of comprehension as to his role.
The Governor took the opportunity to impart his particular brand of wisdom at a conference in Lisbon on ‘financial regulation and supervision,’ a topic about which he can talk endlessly but has failed fully to grasp.
Carlos Costa said that it is typical that in this phase of a financial crisis, politicians promise that ‘there is financing for all but that there are no more costs for taxpayers.’
“If politicians do not want banks to take risks, this will impact on the financing of the economy with less lending to companies and families. If politicians want to see finance advanced without looking at the risks, in the end someone will have to pay for bad decisions.”
Carlos Costa said that risk is part of the banking business and can not be cancelled, so it is up to the banking supervisor to ensure "financial stability within certain parameters of risk," something Costa has failed to do in the past and is unlikely to manage in the future while he counts his days until retirement.
The Mr Magoo of banking supervision said it is not the supervisor who "can be asked to guarantee that an institution will survive" because it is not the supervisor who decides to grant a certain credit and what risk that credit has attached to it.
Costa’s long, drawn out and thinly concealed excuse for his failures fool nobody. His swipe at politicians, by which he means the current administration, is a new angle as he struggles to clean up his own mess which includes the bargain basement sale of Novo Banco to a wholly unsuitable US vulture fund while barring a €3 billion cash offer, the looming London court battle with BES senior bond holders that he lied to and the botched clean-up operation to refund hundreds of BES depositors who were robbed of their savings.
Nothing is ever Carlos Costa’s fault and if it were not for the protection his post is afforded by the European Central Bank, he would have been replaced shortly after the new government took over in November 2015.
Finance Minister Mario Centeno said today that "We have solved six of the seven big problems in banking."
"We had seven big problems and we solved six: Banif was bought by Santander; BCP was capitalised; BPI was bought by La Caixa; Caixa Geral de Depósitos, was capitalised with public capital; Novo Banco was sold to an American fund; and the Resolution Fund, with a very high debt due to Banco Espírito Santo, has a 30-year state loan to repay.”
“We have Spanish, Chinese, Angolan and North American capital invested in Portuguese banking. It is a unique case in Europe," said Centeno in an interview with El País, published on Thursday, June 2nd.
Regarding the seventh big problem, bad credit, the finance minister said that this is not just for the banks to solve but relies also on the recovery of companies.
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See also: 'Bank of Portugal to be stripped of much of its power' March 2017
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