Caixa Geral de Depósitos lost over €50 million in the first half of 2017 which is "in accord with the institution’s strategic plan" according to Paulo Macedo.
In the presentation of the half-yearly results, the Caixa Geral president said that "bank account charges are stable, are the lowest in the market, but that they will increase, as in the bank's strategic plan" that he says was agreed with the government but is fiercely opposed by customers and opposition MPs.
Paulo Macedo considers that raising account charges at Portugal’s 'people’s bank' is an important way of dragging the bank from loss to profit, showing yet again that the public is being charged for the bank’s past mismanagement which has yet to be explained.
The State-owned bank’s accounts were presented late on Friday afternoon by Paulo Macedo at the institution's headquarters in Lisbon - the timing carefully chosen to avoid any adverse affect on the bank’s stock price as the exchange is shut and from Monday many people working in Lisbon’s financial and media sectors will be on holiday.
Most media has reprinted the ‘good news’ that Caixa Geral’s losses were "not as bad as a year ago" when the bank managed to lose €205 million over the same half-yearly period.
The chairman of Caixa Geral was "satisfied" with the results, noting that they are "in line with the strategic plan" drawn up for the state bank to 2020 and that the results “allow us to anticipate good prospects of meeting the targets set for the end of 2017.”
The trading figures do look healthy with net interest income up 18% to €656 million, total customer funds up 3% to €69.5 billion - a growth of €1.3 billion.
Operating costs increased 2% to €638 million, mainly due to paying out €61 million to persuade many members staff to leave.
Bad loan provisions dropped 82% to €55 million as Caixa Geral’s management continues to clear out its stable of dud loans but this effect was nullified by the fact that the other provisions and impairments increased more than tenfold to €344 million, "of which €322 million were non-recurring related to the restructuring and sale of international activities."
Two major bad loans that Paulo Macedo would not be drawn on were Arlant and Comporta.
In 2015, Artlant was Caixa Geral’s largest failure with the bust Sines petrochemical plant costing the bank nearly €700 million. “Regarding Artlant, the exposure is zero," said Paulo Macedo, acknowledging that the entire amount has been written off, to the detriment of taxpayers.
Another loan that has gone sour it the one at the Comporta estate, majority owned by failed Espírito Santo property company, Rioforte.
The businessman Pedro de Almeida, is said to have signed an agreement to buy shares in the Special Real Estate Investment Fund of Herdade da Comporta, from Rioforte.
Caixa Geral is owed €109 million by Comporta, yet the Pedro de Almeida agreement sees Comporta sold for a ‘token sum.’ (here)
Asked about those involved in the Comporta sale, Paulo Macedo said that "there is an effort to resolve this asset and to reach an agreement."
The agreement needs to be to recoup the €109 million from an estate worth at least €400 million, anything else is a trick and one for which Macedo will be responsible.
There was no mention of the suspicion that Caixa Geral has been deliberately categorising non-performing loans as 'current.'
On July 10th, news broke that Public Prosecutor's Office suspected that senior managers of the State-owned bank have been fiddling the books for years to hide losses, despite these same managers having been cleared by a Commission of Inquiry whose MPs had access to severely limited information.
The Public Prosecutor claimed that at least €1.4 billion in non-performing loans has been reported as 'active' even though interest and capital repayments stopped years ago.
Suspicions arose after the Court of Appeal finally decided that the Bank of Portugal must deliver the loan information documents requested by two Committees of Inquiry looking at Caixa Geral’s past management and loan history.
The Ministry of Finance and the Stock Market Regulator had backed the Bank of Portugal’s refusal to release these key loan documents, claiming ‘client confidentiality’ despite these clients having ripped through billions that taxpayers have ended up responsible for.
The alleged misrepresentation of financial accounts should have stopped in 2016 with the effects on current trading statements, should the Public Prosecutor’s suspicions be founded, only to be guessed at, at this stage.
Any institution that reports losses, saying they are "not as bad as last year," can not be said to be out of the financial mire. Paulo Macedo inherited a mess and is making good progress but, as with other of Portugal’s banks, there may well be further shocks to come.
As the taxpayer is the lender of last resort and with Caixa being 100% owned by the State, Macedo is on a winning horse if he can steer it in the right direction but the public must be told what went on in the past, with those responsible held to account.
The president of Caixa Geral de Depósitos, Paulo José Ribeiro Moita de Macedo
