Caixa Geral de Depósitos has €2.3 billion in risky debt. Who owes the most? Friends of corrupt creditors without giving guarantees?
See the list of those who live at the Portuguese taxpayers’ expense and do not pay what they owe. This is part of the extensive list of debtors that the committee of inquiry has been tasked with analysing before Caixa Geral is handed any more taxpayer funds for a refinancing excercise that will aim to cover the losses and impairments shown below.
Most of these loans were authorised in the last decade, decided under the management of Carlos Santos Ferreira and Armando Vara who ran the State-owned bank between 2005 and the end of 2007.
After that date, many loans were renewed and extended.
Caixa Geral’s most problematic credits and investments in Portugal and Spain date back to 2005 to 2010 and resulted in losses of €6 billion.
The worst period of management in Caixa Geral de Depósitos was between 2005 and 2010. Loans of tens of millions of euros, sometimes hundreds of millions of euros, were granted with fragile guarantees to fund acquisitions with high credit exposure to Spanish companies proving ruinous.
Those were years of euphoria. José Sócrates was prime minister. Carlos Santos Ferreira and Armando Vara led Caixa were president and director of Caixa Geral between 2005 and 2008. They then ran BCP, with equally disastrous results.
It was a period of credit boom for riskier and speculative investments - there were several loans for stock purchase and it was at this point that Caixa Geral lent almost €300 million to the Vale de Lobo tourism project (led by Hélder Bataglia), and became a shareholder.
The total number of impairments recorded by the nine largest debtors reaches €912.1 million.
Here are the names that appear on Caixa’s list of largest debtors:
Grupo Artlant - €476.4 million and €214 million in recognised credit losses (impairments). Artlant was created to develop a major industrial project in Sines, with the construction of a chemical industry unit. The promoter was the Catalan group La Seda, a group that after running into trouble then had the Portuguese businessman Carlos Moreira da Silva, leader of Barbosa and Almeida (and shareholder of the Observer), as a shareholder. Caixa Geral de Depósitos started out as a major financier, but eventually became a shareholder in La Seda, where it still holds 14%. An involvement that also had as objective to ensure the realisation of the investment in the factory of Sines.
The company advanced with a special revitalization process (PER) and in 2015, Caixa Geral claimed credits of more than €520 million. The last information available at the beginning of 2015 is the date of the homologation of the recovery plan.
Efacec Group - €303.2 million of loans and €15.2 million of impairments. The exposure comes from financing the company, but also from its two largest shareholders, the José de Mello group and Têxtil Manuel Gonçalves. The Portuguese groups sold 65% of the main unit of the Efacec group, Efacec Power Solutions, to Isabel dos Santos about a year ago. The deal, valued at €200 million, was more than a simple sale, it was a restructuring of shareholders and the company. Caixa as a creditor participated in the financing of this operation.
Vale de Lobo - €282.9 million of exposure and €138.1 million in impairments. It is a controversial real estate business that is part of the judicial inquiry into the former Prime Minister José Sócrates and which also involves Hélder Bataglia, the president of Escom. The decision of Caixa Geral to enter the luxury development in the Algarve dates from 2006 and has been attributed to the then administrator of the public bank, Armando Vara. Caixa is a shareholder of the company that operates Vale do Lobo, at the same time that it is the largest funder. In 2014, the real estate holding company that held this stake recognised losses of €196 million, part of which will be attributed to Vale do Lobo. In the 2015 accounts, Caixa Geral says that the net position was negative at €137 million. The state bank has a financial stake of 24%, but is also the largest creditor of this venture which last year was put up for sale.
Auto Estradas Douro Litoral - €271.3 million exposure and €181.4 million credits lost. The motorway concession involves the José de Mello group which, through Brisa, is one of the largest shareholders of this concessionaire that has failed to meet the financial commitments made with the financing banks, namely at the level of the ratios . Douro Litoral is a concession with tolls whose revenues have proved to be much lower than expected and insufficient to remunerate the investment. The company has several requests for financial compensation to the State, in the total amount of about €1.4 billion that are being analysed in a tribunal.
Espírito Santo Group - €237.1 million in loans and €79 million impairments. Caixa Geral was the most exposed financial institution to Grupo Espírito Santo. The Observer surveyed the bank's exposure to Espírito Santo Group in May last year, still based on provisional lists of securities claimed by the creditors of seven companies that were in the process of revitalisation or insolvency. The amount was in the order of €1,300 million. Caixa claimed about €410 million.
Lena Group - €225 million loans and €76.7 million impairments. The Leiria-based construction group was one of the fastest growing during the last cycle of public works in Portugal, during the governments of José Sócrates. The Lena Group built highways and was involved in the renovation of schools and in the high-speed rail network (TGV), where it was part of the consortium that won the first contract, which has since been canceled. Lena also grew to other sectors - tourism, energy and media - and other geographies, winning important contracts in emerging markets such as Algeria and Venezuela. The delay and uncertainty in the implementation of these international contracts, some obtained from the official travel arrangements of José Sócrates, and the asphyxiation of the Portuguese construction market caught up with the group against the backdrop of an expansionist bet. Lena had to fight hard and make a restructure of her debt.
António Mosquito Group - €178 million and €49.2 million of credits lost. The Angolan businessman is associated with two investments in Portugal: Soares da Costa and Controlinveste. In the case of Caixa Geral, the exposure to António Mosquito may result from financing the Portuguese businessman who was Manuel Silva's largest shareholder in Soares da Costa.
Reyal Urbis - €166.6 million of loans granted, with €133.3 million impairments. Spanish real estate was already identified in 2013 as one of Caixa Geral's main debtors, at which time it filed for insolvency - the second largest in Spain's history. In the previous year, the company's debt had reached €3.6 billion. Santander and its subsidiary Banesto were among the biggest lenders in the real estate business that owed it €830 million, according to the Spanish newspaper El Mundo, which put Caixa Geral on the list of minority lenders.
Finpro SCR - €123.9 million and €24.8 total impairments. Américo Amorim, the Social Security fund and Banif, and Amnesty International made several international investments, financed with debt, mainly in the area of infrastructure. Finpro entered a special revitalisation process in 2014 and news reports indicate Caixa as the owner of more than half of Finpro's debt. One of the shares of Finpro was in the management company of the Port of Barcelona that was sold last year. The company will meanwhile have been considered insolvent with a debt of €268 million.
