Santander is no longer being paid by the four transport companies which have accumulated potential Swaps contract losses of over €1.2 billion as at the end of February, according to the president of Portugal’s Treasury Management Agency for Public Debt (IGCP) at a hearing in Parliament.
According to João Moreira Rato, the greatest risk of loss is when these contracts reach maturity or are cancelled.
The remaining toxic Swaps borrowings from Santander are held by the Lisbon Metro which owes €600 million, the Metro do Porto which owes €483 million, Carris, and the Society of Collective Transport of Porto (STCP) which face potential losses of €101 million and €44 million.
The response to questions posed by the Algarve communist MP Paulo Sá to the president of the IGCP, which is monitoring the progress of these contracts ‘very closely,’ was zero.
Highlighting the potential losses from these contracts with Santander as being over €1,200 million, Paulo Sá demanded explanations from the President of the IGCP.
Rato’s reason for not answering questions about Santander was because Santander is the only bank that has refused to negotiate with the Portuguese government for the early settlement of these Swaps contracts, and the case in now in court in the UK.
Santander filed a lawsuit in London to prove the validity of the contracts, to which the Portuguese Government has responded. Moreira Rato said that the Santander contracts "are not being followed by IGCP because they are in litigation, "thus coming under the purview of the Ministry of Finance” – rather conveniently.
Swaps contracts sold by Santander were considered the most problematic in an audit conducted by IGCP as they could lead to the highest losses for the borrower.
While the case goes through the courts, instead of being settled between Santander and the Portuguese treasury, the payment of due amounts under the contracts have been suspended thus saving €300 million in interest for the transport companies since September 2013.
Many of the swaps that were considered ‘problematic’ were settled early in the first half of 2013, except Santander’s.
The Communists required Isabel Castelo Branco to appear in Parliament to clarify status of contracts of public transport companies with the Santander bank - in fact they want full clarification of the situation "in particular with respect to the invalidity of such contracts and the consequent suspension of payments by public companies."
Isabel Castelo Branco succeeded the current finance minister, Maria Luís Albuquerque who herself narrowly escaped the Swaps cull which already has seen the end of three secretaries of state and four Directors of public companies who signed Swaps contracts, alledgedly with the OK from the IGCP where Alberquerque worked.
When questioned on her role in condoning the Swaps contracts, Alberquerque suffered from ‘contradictions in his speech’ but managed to hold on to her new job as Finance Minister.
