With the sound of a stable door closing behind him, Portugal’s Finance Minister, Mário Centeno, said today that Caixa Geral de Depósitos (CGD) must serve the Portuguese economy and that the bank must remain in State ownership.
"It is a public bank, which will remain public, and the government wants it to continue to be public. But it is a bank that has to be put at the service of the Portuguese economy. This is the Government plan," said Centeno, responding to questions about the €4 billion estimated cost to the taxpayer of recapitalising CGD.
Without admitting to figures for the recapitalisation of the bank, Centeno, at Lisbon debate organised by the Forum of Company Directors. said that the planned injection of taxpayers' money must be "decisively decided" in order to stabilise the financial system, adding that the government is working with the European Central Bank and the European Commission.
"It is a national project is not partisan, it is not just the government. As is indeed the plan of growing Portugal’s economy," said the minister.
Centeno admitted that the stabilisation of the financial system is one of the constraints on the Portuguese economy, a problem that he added, "can only be stabilised with time, patience and action."
Among the other problems identified by the minister is the lack of capitalisation of Portugal’s companies, stating that there will be a capital reinforcement drive for companies via the launch of "financial instruments using European funds" in a targeted measure that the Portuguese economy needs.
Centeno did not dwell on Caixa Geral’s recent past that saw a €2.26 billion dodgy debt pile grow to €4 billion in less than a year. Nor did he mention the types of companies that had availed themselves of 'no questions asked' loans with minimal security requested by the last CGD administration.
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 haphazard regime under Armando Vara and Carlos Santos Ferreira but other Caixa Geral 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 and questions are only now being asked as to why Caixa’s new management needs €4 billion to plug the gaping hole in the accounts.
Big debtors as of last August include:
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
