The eventual constitution of a bank bad in Portugal, that adds the credits to the difficulties that are in the banks, is a risk for the front of the BCP. Solvency II, the supervisory regime of the insurance that came into force last year, too, since the BCP has 49% of the Western Life.
“The eventual creation of a 'bad bank' in Portugal can be translated into requirements for additional capital for the bank,” notes the prospectus of the capital increase of 1.33 billion euros that the institution led by Nuno Amado will implement.
According to the document, published this Thursday 12 January, “the use of a 'bad bank' for the reduction of the stock of NPE [exhibits not performantes, which includes non-performing loans] held by the bank could involve the transmission of credits at a price below its book value, which would result in losses to the bank and, consequently, to a deterioration of its capital ratios”.
Even mentioning the subject, the BCP observes that the constitution of this vehicle has not yet been the subject of any novelty, although it has been mentioned “by members of the Government and those in charge of the Bank of Portugal”. The governor Carlos Costa is one of the that advocates the creation of a “bank bad”, whose molds are not known.
The issue of insurance is another of the risks listed in the prospectus authorized by the Commission for the Securities Market (CMVM). In 2016 entered into force the supervisory regime for insurance Solvency II, and that “new regulatory requirements are expected in the coming years, in particular with regard to the revision of the capital requirements, the guarantees of the long term and the tools of supervision macro-prudential”.
“There is the risk of the effects of these measures adopted or to be adopted, may adversely affect the Millenniumbcp Ageas, influencing the respective business operations, strategy and earnings, including potentially an increase in the capital required to support the business and create a competitive disadvantage relative to other groups of european and non-european, who are providing financial services”, indicates the bank is chaired by Nuno Amado. The Millenniumbcp Ageas is the company through which through which the bank holds 49% of the area of life insurance, to the Western, being that 51% are in the hands of Ageas, which is the bank’s partnership in this sector.
“This impact may affect the dividend policy and/or result in increased capital that may adversely affect the bank’s business, financial condition and the results of its operations and its future prospects”, adds still to the prospectus. The BCP anticipates the “potential return” to the dividends in 2018.
In the prospectus, as occurs in this type of operations, are listed the relative risks to the Portuguese economy and also the climate europei but also to the markets in which BCP is exposed to.
The capital increase of BCP starts next week. On Tuesday, the shares of the bank shall trade without the rights associated with the operation, as these start trading on the stock exchange the following Thursday, 19. These rights allow the purchase of the new shares that will be issued by BCP.