Montepio can now have new shareholders: mutual association members approved by majority the amendment of the bank's statutes, on the same day results from the first quarter of 2017 are presented.
The general assembly of Associação Mutualista Montepio (Montepio Mutual Association) approved this Thursday, by a large majority (91.8%), the new statutes of Caixa Económica Montepio Geral (CEMG), which allows it to be transformed in a limited liability corporation.
The chairman of the Montepio Group, António Tomás Correia, stated it was a great day for Montepio and its associates: “Everyone should be congratulated, because of the importance of the conclusion of this process, which creates the means for Caixa Económica to assert itself as a great Social Economy Financial Institution“.
A solution for Montepio could be a vehicle with Santa Casa
Teams from the Bank of Portugal and the ministries of Finance and the Labor and Social Security are studying together the best solution to close Montepio‘s dossier as soon as possible. A new option could be to create a conduit (financial vehicle), owned by Lisbon and Oporto’s Santa Casa da Misericórdia (Holy Houses of Mercy) and by a non-banking entity, as well as creating financial instruments to prevent Santa Casa from entering Caixa Económica‘s capital right away, even if there is the possibility of converting securities in shares in case of a flaw in the reimbursement.
According to the Portuguese newspaper Público, this solution could be more expensive to Caixa Económica (CEMG). Nonetheless, the bank will have immediate access to liquidity and will have its capital reinforced, which gives it time to move forward with a restructuring and generate more income — and avoid a formal reassessment of the bank.
Montepio cuts costs and profit
In the first quarter of 2017, Caixa Económica Montepio Geral (CEMG) made a profit of over 11 million euros, after having presented negative results in the homologous period — 19.8 million euros in losses.
“Net income rose €30.9Mn, to €11.1Mn, due to the improvement of the core business performance and also to gains on the efficiency of the operating structure”, can be read in the press release on Montepio‘s consolidated results.
The bank presents three main reasons for its return to profit:
- Decrease in the operating costs of 6.9 million euros;
- 35.6% increase in the financial margin to 18.7 million euros;
- Improvement of the market share on credit and customers’ deposits, namely in net commissions which increased 23.7% to 26.1 million euros.