Banco Madesant, the Santander group's investment bank in the Madeira Free Zone, closed its doors last month after a "drastic reduction" in business.
Santander Group has closed its investment bank in Madeira, Banco Madesant, created in 1994, after a “drastic reduction” of its business in recent years, having accumulated losses of €25 million since 2017.
Based in the Free Trade Zone, the bank has seen the main activities to which it is dedicated disappear “progressively”, according to last year’s accounts, which is why it has moved forward with an orderly process of dissolution and liquidation. ECO asked the bank in Portugal to clarify the implications of this closure but did not receive an answer.
Funded essentially by Santander group entities, Banco Madesant had three main businesses languishing for different reasons: granting credit, independent trading and managing portfolios on behalf of others.
In the case of credit grants, the now liquidated institution saw its activity highly conditioned by the European Central Bank (ECB)’s expansive poly in recent years, which caused its usual counterparties to seek funding from the central bank to the detriment of the bank. Madesant Bank was counting on a reversal of ECB policy last year, which did not happen, and in a last-ditch effort, it even tried to seek business from companies without access to central bank funds. It was unsuccessful, and the bank’s liquidity – which should have been generating interest income – remained in the drawer.
On the other hand, the bank also had to reduce securities trading when it realised that the increased activity’s risk “no longer fit within the usual parameters”.
As for portfolio management on behalf of others, it had already applied to the Securities Market Commission (CMVM) in 2018 for registration to exercise the activity after concluding that it was not sustainable.
The year 2021 highlighted the difficulties that Banco Madesant, owned by Aljardi SGPS, a company within the Santander group, had already been experiencing in previous years.
It accumulated over €3 million in losses, its fifth consecutive year in the red.
Faced with this scenario, the bank informed the Banking Supervision Department of the Bank of Portugal in January that it was liquidating the company. The dissolution took place at the end of last month.