The chief executive of Caixa Geral de Depósitos , Paulo Macedo, said today that it is not up to the government to interfere in the bank's lending policy.
"It is not up to the state to meddle in the premiums, the credit policy, or give directions to buy assets and sell assets," said Paulo Macedo during a hearing in the budget and finance committee.
Macedo referred to the role of the state in the bank, saying that it is necessary to, "define what is its shareholder position," by putting red lines on the topics where the state should not meddle, since these are up to the management team.
Had the state done a bit more meddling, CGD would not have cost the taxpayers billions in bailing out the palsied institution but the chairman of the state-owned bank said he hoped, "there will be a consensus" on the subject, "in the light of what happened and in the light of the Bank's practices."
Two weeks ago a new controversy about CGD broke out when an EY audit revealed, for the period 2000 to 2015, poorly assessed lending criteria, bonus allocations to directors when the bank was making record losses and the approval of loans with unfavourable opinion from the bank’s own credit rating department.
In this audit, EY pointed to seven loans that cost around €1 billion when they went sour with little or no asset backing.
After seven months of demanding a view of the audit, without success, CGD's chairman handed the report to MPs last Friday, but had taken out the names of the debtors, the amounts of the loans and the bank's exposure to these loans, due to ‘banking secrecy.’
After presenting the document, Paulo Macedo acknowledged the existence of "bad practices" and "mistakes" at CGD but stressed that the bank now had better governance and risk management than in the past and expressed outraged that all previous directors were under scrutiny and assumed to be guilty of poor management, “that is not acceptable."
Paulo Macedo clearly has forgotten who owns the bank by his assertion that the state, as 100% shareholder, should not be able to influence how the bank is run.
Comments