The first stage of CGD’s recapitalization has been “concluded”
The first stage of CGD’s recapitalization, contemplating 1,445 million euros, has been concluded. In a second phase, there will be over 2.7 billion euros and another billion euros’ in high risk debt.
The Ministry of Finance has disclosed this Wednesday that the first stage of the recapitalization process of Caixa Geral de Depósitos is concluded. The recapitalization began with a capital increase of “approximately 1,445 million euros”, stated Mário Centeno’s ministry.
According to the Ministry of Finance, in this first stage, 945 million euros were converted in CoCo bonds (contingent convertibles) and 500 million euros were incorporated in Parcaixa shares. Overall, there are 1,445 million euros of new capital.
“Within the recapitalization process of Caixa Geral de Depósitos (CGD), the Portuguese state began, on January 4, 2017, implementing the ‘General Agreement’ signed on August 23, 2016, between the European Commission and the Portuguese State, aiming to recapitalize CGD in market conditions, without resorting to state’s aid”, is stated by the Ministry of Finance in the press release. That way, past losses are wiped clean.
The second stage is still left to be completed: at stake is a 2.7 billion euros capital increase using taxpayer’s money, to which another billion euros are added from private entities. The public bank will issue hybrid instruments worth one billion euros (the bank will sell 500 million in a first instance).
“Additionally, CGD will issue, in stages, subordinated debt instruments eligible for the compliance of regulatory capital ratios to private investors. The financial instrument issued will not be convertible into shares, assuring CGD will fully remain a public bank”, the Ministry of Finance clarifies.
