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Santander confirms that 'swaps' sky-high interest rates continue as before

santander2The story so far: there are 'swap' agreements between Santander Totta and nine of Portugal's publically owned transport companies which in 2013, following guidelines issued by the Ministry of Finance, stopped paying interest due on the loans due to the rapidly escalating sums due.

On April 12th this year, the government and Banco Santander Totta announced that they had reached an agreement which halted the lengthy litigation on the swaps contracts, complex financial loan deals where the borrower pays more if interest rates drop.

As reported earlier in this upright organ, the April 18th agreement meant the State had to announce that the deals were valid, that Santander Totta had behaved professionally and that the State withdrew all outstanding litigation and appeals.

Santander Totta would then agree that it "will withdraw from the action claiming damages from the State and from the Treasury and Public Debt Management Agency and will arrange a loan to the Portuguese Republic, which will result in savings in their financing costs."

This novel arrangement involves a €2.3 billion loan from Santander to the State, over 15 years, to be made "under more favourable interest rates, allowing interest savings."

All well and good, but the original swaps agreements remain. The bank is not going to alter the usuroius terms one iota and confirmed today that the contracts will continue to accrue interest as the April 18th agreement with the State was just to ‘normalise payments.’

As the European Central Bank is expected to continue its low interest rate policy for the foreseeable future, the rates paid on these contracts will remain at the top end of unbelievable.

The public transport companies involved - Metro do Porto, Metro de Lisboa, Carris and Sociedade de Transportes Coletivos do Porto - will have to pay arrears of €529 million for missed payments from 2013, when Maria Luis Albuquerque decided they should stop paying Santander, and a further €1.159 billion that the contracts are accumulating until the last one expires in 2027.

António Vieira Monteiro, the chief executive of Santander Totta, confirmed today that no changes had been made to the text of the contracts, which should therefore continue to accrue interest.

According to the latest official data consulted by Dinheiro Vivo, the contracts already allow Santander to charge between 30% and 92%, and according to the "ECO", currently three of these swaps already exceed 100% interest."

Asked if he was comfortable with charging such high interest to the state, aka taxpayers, Monteiro said that this was not his role, "I do not have to be comfortable or not," he said, thus placing him at the top end of the 'greediest banker in Portugal' chart and a clear winner in the 'things not to say to the press' category.

The millionaire leader of Santander Totta has tried to show what an upstanding and generous bank he represents as the new €2.3 billion loan to the taxpayer aka the State, is at 2.3% rather than the 4.2% the State currently is borrowing at, though he does not explain why nor at what rate Santander is borrowing at to fund this deal.

The fact that these iniquitous contracts were signed in the first place shows Portugal’s public sector and government excelling in the naivety normally associated with schoolchildren if faced with complex financial instruments.

Santander Totta took full advantage of those with whom its mangers were negotiating. Had this been a deal involving the bank and a member of the public, a case of mis-selling would have a high chance of being proved in court.

Santander's behaviour over these deals will not be forgotten while Portugal scrambles from the bottom of the European barrel in an effort to improve itself.

The ill-advised, smug and self-satisfied comments from António Vieira Monteiro place do little to rehabilitate Portugal's domestic banking operations in the eyes of a public that not only has been royally scammed ripped off and lied to by banks in the past decade but now is being charged astronomical interest rates because idiotic or bribed public sector employees did not know what they were being asked to sign. They then asked the Governemtn's Public Debt Management Agency for approval and were told to go ahead.

In a clear case of 'shitting in its own nest,' the arrogant pronunciations from Santander's executive president will have damaged the bank's image with the Portuguese public and those in government responsible for State funding.  

 

https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcR0EEbh3mwK1PvrPtl3yORthvV_bsAAJQ12oPh0pSjSKzDFnw_3

See also: http://algarvedailynews.com/news/11481-swaps-contracts-litigation-ends-in-2-3-billion-loan-from-santander-totta

Comments  

0 #5 Ed 2017-04-27 13:02
Quoting CHARLY:
Gentlemen, in my knowledge SWAP and SWAPPING means the following:
1. a company (in these cases the train and the bus and the metro company = let's say the Portugese state) buys the products and the materials they need.
2. Immediately after that same companies (or the state) sell these same products and materials to a strong financia lprivate partner (in this case Santander)
3. Both parties make now a LEASE contract for these same goods and the companies or the state from now on have to rent their own material. Of course for that they have to pay a very high inerest to the private company.
4.one can ask now what might be the benefit of such a "financial combination" ? Simple: the companie can buy all she need and pay it "slowly and slowly" ... no matter at what cost !!!!! Of course and like always the bank will be the big winner as we can read in the article.
3.


For advanced students: all is revealed on this link: http://www.investopedia.com/terms/s/swap.asp
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+1 #4 CHARLY 2017-04-27 12:38
Gentlemen, in my knowledge SWAP and SWAPPING means the following:
1. a company (in these cases the train and the bus and the metro company = let's say the Portugese state) buys the products and the materials they need.
2. Immediately after that same companies (or the state) sell these same products and materials to a strong financia lprivate partner (in this case Santander)
3. Both parties make now a LEASE contract for these same goods and the companies or the state from now on have to rent their own material. Of course for that they have to pay a very high inerest to the private company.
4.one can ask now what might be the benefit of such a "financial combination" ? Simple: the companie can buy all she need and pay it "slowly and slowly" ... no matter at what cost !!!!! Of course and like always the bank will be the big winner as we can read in the article.
3.
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0 #3 Ed 2017-04-27 08:39
Quoting Peter Booker:
I do not understand swap contracts, but it seems to me that the Bank is honouring the commercial arrangements it made with the Portuguese State.

The real question is: who signed these contracts on behalf of the state? And why? And does he hold shares in Santander?

I see this differently.

The State is being forced to honour a deeply suspicious and ruinous contract with Santander.

This type of sophisticated financial gamble should never have been offered by the bank's salesmen to these State-owned enterprises responsible for public money.

Santander knows this yet insists through the court that the deals are paid for in full. The new loan is only to cover the arrears built up. Yet again the taxpayer is being skinned alive with the government and the bank standing by and applauding.
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0 #2 Peter Booker 2017-04-27 07:54
I do not understand swap contracts, but it seems to me that the Bank is honouring the commercial arrangements it made with the Portuguese State.

The real question is: who signed these contracts on behalf of the state? And why? And does he hold shares in Santander?
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+1 #1 CHARLY 2017-04-26 18:54
why am I not surprised or choqued at all ????
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