Old habits die hard in Portuguese banking as news is leaked that Montepio has lent €148.3 million to businessman Rui Alegre against guarantees amounting to just 40% of the loan.
Caixa Económica Montepio Geral has an exposure of about 150 million euros to the business group that wanted to create cruise lines.
Caixa Económica Montepio Geral financed €148.3 million of a cruise business being set up by businessman Rui Alegre.
The money was loaned to 14 companies controlled by Alegre with part of the advance being used to repay loans from other banks, to pay the businessman’s salary and buy him two cars.
Everything started with the purchase of the Funchal, an old ship from colonial days that was bought by Alegre for renovation but was never used and remains at Cais da Matinha in Lisbon where its price at auction should be around €3 million, less than 1/10th of the money spent on its refitting.
Alegre’s dream of creating a cruise company involved him buying three further ships from a Greek owner.
For two years, Montepio financed the project through 14 companies of Alegre’s companies where 58 credit agreements were signed, some of these granted even though the bank’s Credit Assessment Department had given negative opinions.
On June 30, 2015, four months after Rui Alegre's companies were declared insolvent, Montepio's Audit and Inspection Directorate presented a 40-page report which detailed the reckless nature of the bank’s actions.
Montepio now has an exposure of €150 million from the 58 loan contracts. The auditors noted that some of the bank’s money was used to pay off previous debts, to buy two cars and pay Rui Alegre's salary.
Tomás Correia, the former president of Caixa Económica Montepio Geral, who was removed by the Bank of Portugal, claimed not to have read the report and emphasised that says he does not have any kind of relationship with Rui Alegre and that he trusts that, "all the directors have respected all the rules of credit assignment."
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