The management of Portugal’s latest financial catastrophe, the State-owned bank Caixa Geral do Depósitos, is to present a plan by the weekend for a €5 billion refinancing package.
The proposal already has been approved in principle by the Left Bloc, the Communist Party and The Greens wioth the former coalition parties calling for a full inquiry into the bank's past and current management.
Caixa’s management plans to shed 2,500 workers who will leave the bank through voluntary redundancy or will take early retirement.
Structurally, the bank will close 300 branches, mostly those based outside Portugal.
The controversial recapitalisation, an earlier figure of €4 billion has risen to €5 billion, is needed due to the high level of loans handed out by the bank, many of which are likely never to be repaid. Also, the European Commission will insist that the bank has a suitable financial cushion to enable it to operate within the required fiscal parameters that now apply to all European banks.
Meanwhile, the former PSD and CDS-PP coalition partners today delivered a draft resolution to parliament demanding an independent external audit of Caixa Geral de Depósitos and, for good measure, of Banif as well.
According to the text, these audits "should identify any circumstances indicative of irregularities which could configure liability of any kind," and highlights the lack of transparency surrounding the government’s managament of these two banks that will end up costing the Portuguese public billions to sort out.
The two former coalition partners argue that the audit should "determine and assess the actual capital needs of Caixa Geral for any injection of public funds, the facts and options for such measures, the amounts proposed the alternatives."
The PSD and CDS-PP argue that it is also necessary to assess the activities of Caixa’s previous management when granting loans and their credit management policies since 2000, with particular scrutiny of higher value loans and subsequent defaults and whether guarantees had existed.
