European Commission accepts the use of public money provided under conditions similar to a private. Injection can reach four billion. Brussels green light does not remove the need for restructuring plan
The European Commission already has in his hands the recapitalization plan of Caixa Geral de Depósitos (CGD), but even with the green light Brussels practically confirmed, is not removed the need to move forward with a restructuring plan which shows that the state is investing as a private shareholder.
This is the condition that the European Commission approve the injection capital in the public bank, as stated by the European Commissioner for Competition, Margrethe Vestager. In an interview with TSF, the Commissioner assured that, as a matter of principle, a state can invest, “There has to be necessarily help of state.”
“If the state investing as a private would do well this is great for us and, of course, is not state aid, “he said, stressing that the European Commission has no prejudice against the public ownership of banks. “We are neutral in relation to the property,” assured the Commissioner. The Directorate-General for Competition (DG Comp) has received, on Friday night, the proposal of the Executive for the recapitalization of the state-owned bank, found the DN / Mad Money. The document will now be subject to analysis
For the analysts contacted by DN / Money Live, the green light to the capitalization -., According to the Public, is already given but has not been formalized – does not invalidate the submission of a restructuring plan for the bank, which can take an injection of capital of four billion euros.
“This Brussels signal is positive for the recapitalization of CGD, although one can say that the process political negotiation with the European authorities would eventually result in a solution, “says Albino Oliveira, the Patris. “This does not invalidate likely restructuring plan a continue to be necessary for the CGD, as will continue to be necessary to check the impact on public accounts,” he adds. A shared vision by Filipe Garcia, the IMF, which notes that the restructuring plan shows that this capitalization must be seen as “an exceptional measure”.
“Brussels will be to strike a balance between the advantages and disadvantages of measure and I think the issues of competition will be overcome, “he adds. Also Henrique Dias, the XTB manager, says the Brussels position is clear: “. The problem is not the capital increase but how this increase will be”
urgent Capitalization
None of the analysts, however, declined to estimate how much you need to cash capitalization. Filipe Garcia says “will attempt to capitalize on top,” knowing is the difficulty in approving such transactions. “I would like the” off “it will be so created will not lead to risk-taking behaviors.” Already Albino Oliveira states, however, it is likely that “the new administration Caixa intends to commence its functions with a more comfortable situation in terms of capital.”
The new management team will be led by Antonio Domingues , who has resigned as vice – president of BPI and will be accompanied by six executive directors. The board of directors will have 19 members, including Leonor Beleza (former minister) and Rui Vilar (former president of CGD) as vice-presidents, according to the Business.
For Albino Oliveira, this model of governance “may represent the first steps towards restructuring plan must be implemented.” Already Henrique Dias says “it is essential that the new administration transmit tranquility to the market”, especially in view of the urgency of capitalization.
The public bank needs until the end of the year, more than 600 million euros to increase by 1% core tier one ratio and meet the requirements of the Bank of Portugal to come into force as early as January, as reported DN / Mad Money. Antonio Domingues have imposed as a condition capitalization four billion euros to take over functions in the bank, reported the Express, although the Prime Minister António Costa has already guaranteed that the value is not as high. The latest figures advanced by the media point to a capitalization of 2.5 billion euros.
The capitalization of CGD has marked the political agenda in recent weeks. The President, Marcelo Rebelo de Sousa, will address the need for capitalization of public bank when he met with German Chancellor Angela Merkel at the end of May. And the prime minister has said repeatedly that the case can not be undermined by having a state shareholder
The clarification of the issue is becoming increasingly urgent:. Yesterday, Moody “s threatened to cut the rating of cash due to uncertainty around capitalization. also because CGD has not returned the 900 million contingent capital euros (CoCos) borrowed by the state and is not expected to do so.
the Finance Minister also is negotiating with Brussels is spending on the capitalization can go to public debt instead of aggravating the deficit this year or can be divided into two parts (deficit and debt), as reported DN / Mad Money. the goal is to the deficit at 2.2% and avoid violating the Stability Pact in 2016, which limits the deficit to 3%.
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