Portuguese Commercial Bank, operating in Portugal's high streets as BCP Millennium, finally has authorisation to cut wages in a long overdue bid to reduce staffing costs by €135 million by 2017.
The pay cuts will be imposed from July 2014.
In 2012 the bank was in deep financial trouble and was swiftly rescued by a state bailout of €3 billion, siphoned off from the country's IMF/EU bailout package and authorised by Prime Minister, Pedro Passos Coelho.
The decision to cut the wages of all workers falls within the scope of the restructuring programme for BCP and has been agreed with representatives of the Trade Union Federation of the Banking Sector.
The measure can happen five days after its publication in the official Gazette, i.e. later this week, but true to form, BCP will only begin to make cuts in July.
The measure aims to ‘avoid further redundancies’ according to the management and temporary salary cuts ranging between 3% and 11% will affect employees with gross monthly earnings above €1,000.
In 2007, Millennium BCP faced turmoil as financial crime investigators probed the bank’s accounts on behalf of Banco de Portugal and the stock market authority.
Preliminary findings by the stock market authority alleged the existence of several off-shore Cayman Island companies which Millennium BCP used to buy its own shares when it increased its capital in 2000 and 2001.
The investigations were launched as a result of a complaint by a leading shareholder Joe Berado who owns 6.8% of the bank.
Berado provided investigators with information which, he alleged, showed that several offences had been committed including various cases of fraud committed by members of past boards of directors at the bank.
The bank’s collapse and subsequent investigation is the largest financial scandal in modern Portuguese financial history, involving corruption, financial duplicity, fraud and money laundering.
On the plus side Millennium BCP is to sell its stake in the Ocidental and Médis insurance companies to international insurance group Ageas.
In a communication sent to the stock market regulator the bank announced the sale of its 49% stake in two national insurers.
This should yield €122 million. BCP management says it wants to focus on the core activities of the banking business.
According to the statement, the group plans to release capital that is currently tied up in peripheral activities to repay its debt to the taxpayer.
