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EU banking supervisor says it would be ‘normal’ to bail out Caixa Geral

caixageralThe chairman of the Single Supervisory Mechanism (SSM) considers it quite ‘normal’ for Portugal’s government to inject €4 billion of taxpayers’ money into the failing state bank Caixa Geral de Depósitos.

A capital injection of public funds, when this is necessary, is considered normal "in Portugal, in Germany or in any other case," according to Brussels.

The Single Supervisory Mechanism (SSM) is a system of banking supervision for Europe controlled by the European Central Bank and the national supervisory authorities of the participating countries, in Portugal’s case, the Bank of Portugal.

The aims of the SSM, operating since 2014, are to ensure the safety and soundness of the European banking system, to increase financial integration and stability and to ensure consistent supervision.

Clearly there is work still to be done.

The SSM Chairman said in Brussels today that it is for Portugal’s Directorate-General for Competition to analyse the capitalisation process of Caixa Geral de Depósitos.

This is exactly the go-ahead that the government needs before throwing more money at the ailing bank as it completes a cover up of the real reasons why Caixa Geral is in such bad shape. There is broad support in parliament to avoid calling for a commission of inquiry into the gaping black hole in the bank's accounts that the incoming chairman wants to fill without having to explain why it exists.

An audit that concluded in August 2015 reported that Caixa Geral granted loans with little or no risk analysis and often to companies with insufficient collateral.

The biggest debtor is Arlant which owes €476 million. The company planned to build a chemical plant in Sines but its major shareholder went bust and the project was abandoned - yet the loan remained.

Some of these loans were granted under the crooked regime of Armando Vara and Carlos Santos Ferreira but other loans were granted more recently such as the €303 million lent to Grupo Efacec.

Loans that are unlikely to be repaid include those to Grupo Espírito Santo, Grupo Lena and to the Angolan businessman António Mosquito.

As at August 2015, Caixa's total exposure was €2,264 million so why does Caixa’s new management want €4 billion to plug the hole in the accounts?

ARTLANT - 476 million
Efacec Group - 303 million
Vale do Lobo - 283 million
Douro Litoral motorway - 271 million
Espírito Santo Group - 237 million
Lena Group - 225 million
António Mosquito Group - 178 million
Reyal Urbis - 166 million
Finpro SCR - 124 million

Meanwhile, the Millennium BCP share price has hit a new low at two cents per share, down 8% on Monday’s trading.

This values the high street bank at just €1.192 billion. Millenium, led by Nuno Amado, has seen shares slide on poor trading news and upbeat projections that the market has dismissed.   

Nuno has presided over this major financial institution that has lost 33% of its value in two weeks and blames 'investor speculation': a recapitalisation is needed despite Amado’s insistence that this is not the case.

In an interview with Reuters last week, Nuno Amado said the bank will maintain a financial discipline and denied any intention of refinancing the business prior to making a bid for Novo Banco.


+1 #2 Adelaide Machado 2016-06-18 10:59
Now the puzzle comes together. I was defrauded in 2008/2009 and after winning two judgements, this thieving bank refuses to return what they stole. Using delay tactics, running to appeal without any merit. Disgusting irresponsible, arrogant and unaccountable.
+2 #1 Jim Williams 2016-06-14 06:56
The Portuguese Bank system has been a shambles for centuries. It hopeless culture shown when ex-BESI Banker Ricciardi giving testimony to the Portuguese Parliamentary enquiry. Incredible to recall, him telling the world that this mismanagement / fraud/ misuse of funds / issuing false information to prospective investors etc etc was " what everyone was doing".

Was there any righteous Banking individual known to have been making any noise at the time? Trying to point out that Banking in Portugal should be done correctly to international standards ? And, more worryingly still - who would this individual have complained to ? Was there anyone at the Bank of Portugal, the nominated Regulator, who would have done more than feed the complaint back to this honest bankers employers. Serena Wylde style. Getting them fined and perhaps imprisoned for 'Defamation of a Bank'.

The same crime being attempted against the TVi station in telling us all about BANIF. Just before its own bank run - as CGD has been doing.