The Caixa Geral de Depósitos (CGD) has the “ok” of the European Central Bank and the Bank of canada to move forward with the process of recapitalisation. For now, the public bank can proceed with the first phase of the process.
In a statement. the Box reported “to have been authorised by the European Central Bank and by the Bank of Portugal to proceed with the corporate operations that are part of the first phase of the process of recapitalisation of Caixa Geral de Depósitos, S. A..”.
The financial institution, that Paulo Macedo will inherit after the passage brief António Domingues, refers now to the shareholder – the State – the approval of the plan aimed at the recapitalization.
A process that goes through several phases that involve different operations. In the communiqué, are inumerados the steps of this first stage that has as primary goal the coverage of the accumulated losses of the past. The money the State will only enter the Box in 2017 after it closed the accounts of this year that will recognize the impairment losses associated with assets that are recorded in the accounts of the bank for a higher value – additional in the loan portfolio, investments and real estate.
release the huge this process:
a) use of free reserves and the legal reserve, in a total amount of more than 1.412 million euros, for coverage equal to the value of the accumulated losses of previous fiscal years;
b) increase, through new entries in cash, the of the share capital of CGD 5,900 million to, at least, most of 7.328 million.
This increase, as was already known, it will be “fully subscribed by the State and held in kind”, through: (i) transmission to the General Box of Deposits, 490 million euros of shares of capital stock of the Parcaixa; (ii) broadcast to the General Box of Deposits, and corresponding cancellation, of the capital instruments core Tier 1 subscribed by the State (CoCos) with a nominal value of 900 million with all the inherent rights, overdue and falling due, including interest accrued up to the date of the subscription.
c) reduction of the share capital of Caixa Geral de Deposits by the amount of 6,000 million euros by means of cancellation of 1,200 million euros of shares with a nominal value of five euros each, of which: (i) more than 1.404 million euros intended to cover the remaining balance of the brought forward losses of earlier years and still to the coverage of reserves of the elements distributable, negative, and (ii) the balance, that is, almost 4,600 million euros for the establishment of a free reserve of an equal amount.
The public bank refers to transactions which, now, has authorization to perform the “integrate in the process of recapitalization,” which is in progress and “enshrined in the strategic plan approved by the State as shareholder”. The ultimate goal, back to be reinforced: the reinforcement of the capital of the bank.
in This way, and in addition to the rest of the operations, the process of recapitalization also provides for: a capital increase in cash does not exceed 2,700 million euros, to be subscribed and paid by the State. And the issuance of instruments from additional own funds of level 1, or other instruments hybrid capital in the amount of, in a first time, 500 million euros, to be subscribed by private investors. “Both realize after closure of the accounts of the Caixa Geral de Depósitos, S. A. on 31 December 2016″, adds the statement.
the Accounts given, this first capital increase is to be achieved through the transmission to the bank of the State of 490 million shares of Parcaixa – owned in 51% by the bank and 49% by Parpública – and the conversion into capital of the debt instruments subscribed by the State (CoCos) with a nominal value of 900 million euros. These operations come together after injection 2,700 million euros in cash, for the part of the State and the subscription by private investors of 500 million euros of debt instrument will only be met after the closure of the accounts for 2016.
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