The first phase of the capitalization of Caixa Geral de Depósitos, with the conversion of the instruments hybrid known as CoCos and with total integration of the society Parcaixa, has already been achieved. Are 1.445 million euros to get to Avenida João XXI.
In the official statement issued this Wednesday, January 4, the Ministry of Finance said that “began” with “the date today” the process “the implementation of the ‘general agreement’ concluded on 23 August 2016 between the European Commission and the Portuguese State with a view to the recapitalisation of CGD in market conditions, without that this set up a State aid”.
“in This first phase, the GBD made a capital increase in kind in the amount of approximately 1.445 million euros, to subscribe and to fully perform by the shareholder Portuguese State, by the delivery of 945 million euros relating to the subordinated bonds conversion contingent (Instruments Core Tier 1 Capital or ISE) and the interest thereon; and approximately 500 million euros, through the delivery of shares of Parcaixa – S. G. P. S., S.,” notes the statement from the office of Mário Centeno. The exact value of the fitting with the passage of the 49% of the Parcaixa that were in the Parpública is not referred to.
This phase should have occurred even in the last year but it turned out to be pushed to 2017. António Domingues indicated in the message sent to employees, the timing of the operation was outlined by the “shareholder” State, represented by the Ministry of Finance. The postponement have backed up the deficit in the past year, such as advanced the Business a week ago.
Capitalization and cleaning of loss of hand
This decision of the shareholder of the State fits in with other operations aimed at the cleaning of loss of the past, such as the CGD has announced the 9th of December. In the first place, the public bank had the use of their free reserves and the global reserve, in the amount 1.412.460.251 euros, to cover losses coming from the past years in the same value. Without any further operation, still would be a plot identical to that of damages for clean up of the balance sheet of the bank. But the first phase of capitalization will serve, in part, for this.
The current capital of 5.9 billion euros is increased, with the operation, today announced by the Government, in the 1.4 thousand million euros, standing at eur 7.3 billion. Is this reinforcement made in kind (and not in fresh money), which is implemented with the full integration of Parcaixa and with the conversion of the CoCos, which configures the first phase of capitalization.
But, however, the General Box of Deposits also reduces the social capital in a € 6 billion. Close to 1.4 billion serve to cover the losses of the past are not covered with the free reserves and the remaining 4.6 billion are used in the “constitution of a free reserve equal in amount”.
In the end, the share capital of the financial institution, which waits for the arrival of Paulo Macedo as executive chairman, is fixed at 1.3 billion euros.
Bonds will not be convertible to
But this is not the capital with which the CGD will be, given that there are over a phase of capitalisation. This first phase will be complemented with the entry of fresh money from the government. The injection of up to € 2.7 billion by the State will be realised only when the accounts for 2016 are closed, which is only predictable in March. It is also at this time that will happen the emission, in a first time, 500 million euros in subordinated bonds that count towards the additional own funds, which will be supplemented later with another placement of 500 million euros.
In a statement Wednesday, the Government does not mention the values of the issue: “ CGD shall conduct an emission phased instruments of subordinated debt eligible for the purposes of compliance with capital ratios from a regulatory viewpoint, to occur with private investors”.
The office of Mário Centeno ensures that the “financial instrument the issue” – the hypothesis on top of the table has been perpetual bond issue – “shall not be convertible into shares of CGD, ensuring the maintenance of the CGD as a bank in full public”.
The process of capitalization has been designed by tony wright, the ex-chairman of public bank, having been the subject of an agreement between the State and the European Commission last Summer.
(updated News with more information by the 18:10)
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