CGD: less losses in 2016, less capital in 2017

  • ECO News
  • 10 March 2017

Brussels formally approves this Friday the capitalization plan. In the 2016 balance, there were 1.9 billion euros in losses and 2.8 billion euros in impairments, so the State will inject less capital.

This Friday, CGD presents its accounts — and losses, which were larger than ever. In 2016, the Portuguese public bank registered 1.9 billion euros in losses, discovered ECO through sources familiar with the bank’s dossier.

António Domingues, former CEO of CGD, negotiated a business with Brussels in which he stated that impairments — that is to say, NPL’s — would rise up to between 3.1 and 3.3 billion euros. Yet, Paulo Macedo, current CEO, was able to reach a slightly inferior amount of around 2.8 billion euros, out of which 2.5 billion in credit. A more favorable operational performance also aided the revision of the bank’s losses: gains in financial operations and the effects of deferred taxes (still to be ascertained) contributed for a positive revision on losses to 1.9 billion euros.

CGD‘s losses between 2011 and 2016

The first part of the recapitalization plan has been carried out and with the 2016 balance closed, the second part of the capitalization can begin. Even with the revision in losses, to 1.9 billion euros, Paulo Macedo would like to maintain the 2.7 billion capital injection in the public bank; however, Brussels is not willing to approve that maximum amount. Therefore, the State should inject between 2.5 and 2.6 billion euros in CGD.

Since the plan has been formally approved by DGComp (Directorate General for Competition) — and ECB –, it is now possible to prepare the road-show to issue 500 million euros worth of bonds.

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