Parliament questions former central bank governor. Left bloc claims BdP knew about bad loans since 2011
Portugal’s former central bank governor Vítor Constâncio is to be questioned by MPs on Tuesday under the second parliamentary inquiry commission into the state-owned bank Caixa Geral de Depósitos.
Constâncio was the central bank’s governor from 2000 to 2010, a period of time included in the audit made by the financial services company EY (2000-2015) into the public bank management.
However, the former governor was not heard by the first parliamentary inquiry commission into CGD because he was unavailable to travel to Portugal, due to his demanding work as the European Central Bank vice-president – he answered in writing to MPs questions.
The second parliamentary commission into CGD management has arisen from an EY audit to CGD which has revealed a total lack of control in credit concession and poor risk assessment, resulting in significant losses for the state-owned bank.
The audit has identified 80 credit operations approved by the CGD board without proper risk assessment which caused a loss of €796 million.
Nevertheless, the board members received “a vote of confidence” and dividends.
Central bank knew about CGD’s bad loans since 2011
At the same time, the Portuguese Left Block (BE) political party has revealed that an audit from the Portuguese central bank in 2011 discovered the bad loans at the state-owned bank Caixa Geral de Depósitos (CGD) and described them in a very “accurate and detailed” way.
According to the Mariana Mortágua MP, the audit made by the financial services company EY to the public bank management was not the first one to discover CGD bad loans and consequent losses.
“When I was looking for the documents previously sent to the parliament by the central bank, I found an audit made in 2011 with accurate and detailed references to all the main bad loans and debtors, such as Joe Berardo, Investifino, Espírito Santo group and Goes Ferreira group”, she said.
The Portuguese MPs are currently carrying out a second parliamentary commission into CGD management following the EY audit into CGD, which has revealed a total lack of control in credit concession and poor risk assessment, resulting in significant losses to the public bank.
The audit has identified 80 credit operations approved by the CGD board without proper risk assessment which caused a loss of €796 million.
