CGD hires Société Générale to sell the bank in Spain

  • ECO News
  • 17 July 2017

CGD has chosen the bank that will support the sale of its operations in Spain. CaixaBI will also be involved in this operation. The Finance Ministry still needs to authorize the sale.

Paulo Macedo made it clear that one of his priorities was to sell CGD’s operations in Spain, and the process is slowly moving forward. The State-owned bank has hired Société Générale to support the alienation, ECO ascertained. The operation will also have the consultancy of CaixaBI, CGD’s investment bank.

Now that the bank which will advise the sale is chosen, all that its left is for the Finance Ministry to publish a decree-law that authorizes the sale, since this is a public financial institution. When contacted by ECO, CGD refrained from commenting.

Although Banco Caixa Geral Espanha contributed with 25 million euros’ profit to the CGD group in 2016, the sale of the Spanish operation is a “priority”, assured CGD’s CEO Paulo Macedo. The bank’s losses of 1,859.5 million euros led to a five billion euros’ recapitalization which involved public and private cash. The injection of state capital in CGD needed Brussels’ approval, which caused the bank to suffer a restructuring. That business plan will lead to the dismissal of employees and the closing of branches in Portugal, as well as a decrease in CGD’s international presence by selling the Spanish, South African and Brazilian operations.

Therefore, the justification for Spain’s problems is mostly based on the investment banking operations is the high amount of impairments: 80% of impairments registered by the group concerning Spain came from other entities from the group, namely CaixaBI. This is the context in which disastrous investments come up, such as the case of La Seda, which did not return the loans granted by the bank, as well as Artlant, which ended up owing CGD close to 600 million euros.

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