A special audit of Montepio bank will be completed this week with the expectation that the results will at last show up the ‘irregularities’ that are widely known to exist.
Last year, the Bank of Portugal finally commissioned a special audit of Montepio and the BoP governor, Carlos Costa, has demanded fundamental changes including a new and independent board to run Montepio after the discovery of uncovered loans and an unhealthy inter-dependence with the Associação Mutualista, also run by Montepio boss, Tomás Correia.
The audit has taken a full nine months, starting in July 2014 with Deloitte looking into irregularities relating to loans that appeared to have little relationship with sound and prudent banking practices.
The Bank of Portugal wants Montepio to have a fully independent management and, in a surprising move for the normally slack governor, wants to kick out Montepio's Tomás Correia.
In 2013, the bank had about €2 billion out on loan with insufficient collateral provided. Deloitte has been anaysing 60 loan agreements handed out from 2009 onwards.
The Bank of Portugal was roused from its slumbers in 2010, when Montepio bought Finibanco for €340 million, a premium of 30% over its share price which caused some raised eyebrows in Lisbon.
The current investigation also covers Finibanco Angola, controlled by Montepio, which is suspected of money laundering in association with BES Angola.
There also is concern that the bank’s customers have been urged by its branch staff to swap money on deposit for investments with 'guaranteed returns' that somehow have not been paid.
This is too horribly similar to those depositors at Ricardo Salgado's BES who lost around €550 million as their new 'investments' turned out to be nothing less than shares in Grupo Espírito Santo companies which ended up being worth close to zero.
In 2013 and 2014, the Bank of Portugal inspected Montepio bank to assess whether credit has been handed out to major customers without normal checks into their ability to repay the loans and to look at poor banking standards within the business.
It is now 2015 and the final report may show that Montepio was well run and its loans soundly covered, or that the bank is run as another fiefdom dishing out loans to chums and liable to collapse at any time.
