In a statement that defines how Caixa Geral de Depósitos has changed from a state-owned bank to one that is further to impose on the goodwill of its tired customers, the bank’s President, Paulo Macedo, said today that, "If Caixa Geral does not make a profit we will have to ask for more money from taxpayers and I have an idea of what the answer will be."
The president of Caixa Geral de Depósitos today justified the increase in customer bank charges with a need for the public bank to return to profits after seven consecutive years of losses.
"CGD has to be equal to others in profitability because the rules are the same for public and private banks," said Macedo during his speech at a Lisbon lunch debate at the American Chamber of Commerce in Portugal.
"We have the notion of what would have happened to a bank with seven years of losses if it were not public," said Paulo Macedo, adding that "only with the current restructuring can Caixa Geral return to profits."
Caixa Geral’s new leader also pointed to the current climate of uncertainty and the rise in macroeconomic risk affecting the banking sector, pointing to the recent impacts on Portuguese banking which have led to significant changes in banking market with the loss of BES, Banif, Barclays and Banco Popular.
Macedo said there are new players including Banco CTT, the changes in MillenniumBCP with a capital increase and a new shareholder in Fosun, as well as Banco BPI whose capital mostly has gone to Spain’s CaixaBank.
The Novo Banco and Montepio are "making their way" Macedo pointed out, to illustrate the changes that have taken place in the Portuguese financial system.
For its part, Caixa Geral has benefited from a recapitalisation of €4.4 billion, with Macedo noting that Portuguese banking now is "more capitalised and with less risk, so it has the liquidity to finance good projects," provided there are associated guarantees.
Paulo Macedo said that Caixa Geral’s current size is satisfactory, with a market share in Portugal of 23% yet he determined that customers should pay for hitherto free services, "The bank has five million accounts, but more than 700,000 customers pay 'zero' for services, not counting those qualifying for ‘minimum banking services.’"
With Caixa Geral admittedly flush with funds, it appears hesitant to lend to Portugal's businesses unless there are heavy guarantees. Hitting its customers with an increasing raft of bank charges is an easy way of improving the bottom line.
The deft skills employed by bankers of old are swept away and replaced with the desire to hoard cash, reduce branch coverage and lend only when there is as near to 100% security as possible.
Large businesses in Portugal have long since given up on organising sensible borrowings from national banks. Many top companies have relocated their registered head office to more flexible locations such as the Netherlands where loans are swiftly and professionally arranged within hours, not months.
Back in Portugal with Caixa Geral, customers and taxpayers just keep on shelling out for the sins of the past.
