By: CHRIS GRAEME
MILLENNIUM BCP directors have drawn a line under the bank’s annus horribilis, which saw its consolidated net income plummet 28.4 per cent.
The new board is to follow a package of measures aimed at restoring public, shareholder and market confidence in the troubled bank whose value now stands at 563 million euros.
At the presentation of its annual results for 2007 in Lisbon, new President Carlos Santos Ferreira outlined the series of prudent austerity measures which included increasing its capital stake to the tune of 1.3 billion euros.
To do this, the bank will launch ‘rights issue’ shares – new shares to raise the capital. The shares will be offered to existing shareholders in proportion to their current shareholding.
The price at which the shares will be offered will be at a discount to the current share price, 1.87 euros, to encourage investors to buy them, and will be fully underwritten by Merrill Lynch and Morgan Stanley.
Other possibilities aimed at repairing the bank’s solvency levels, which were ultimately rejected, had included selling a shareholding (participation) in Bank Millennium bcp Greece, which they chose not to do.
BCP ended 2007 with a capital ratio of 4.3 per cent, considerably below the amount recommended by the Bank of Portugal (BdP).
By launching rights issue shares onto the market that ratio will reinforce its capital stock to six per cent in line with BdP preferences.
Some 800 million euros of the cash is needed to put the bank’s house to rights, with the remaining capital injection of 500 million being used to consolidate and finance BCP’s growth. The bank, because of the international credit crunch crisis, is, like most banks, having greater difficulties accessing easy lending credit on the open market.
Media circus
However, during a highly entertaining two-hour presentation which resembled a media circus, Carlos Santos Ferreira denied any wrongdoing on the part of the bank’s past administration over shady off-shore deals in the Cayman Islands and Isle of Man.
Neither did he go into details over the incompetent management and board room infighting which had kept the bank on the front pages of the nation’s newspapers for six months, all but ruining its good name and reputation.
In his hour long presentation, Carlos Santos Ferreira, a former administrator of state-owned Caixa Geral de Depósitos, said that, overall, the bank’s performance in 2007 had been good considering international market turbulence.
“Consolidated net income in 2007 of 563 million euros was lower than the year before and was negatively impacted by costs related to the tender offer for smaller rival bank BPI, the accounting impact of the impairment charges related with the stake in BPI, restructuring costs, and provisions, which exceeded gains from the sale of financial stakes in EDP and Spanish Banco Sabadell.”
However, he said that on a comparable basis, operating income had grown by 9.6 per cent compared with 2006, reflecting the group’s ability to generate business volume as well as effective cost control measures.
He also highlighted the growing contribution of international operations which increased 40 per cent on a comparable basis and represented 19 per cent of the Group’s net income and praised “the efforts of our business teams” under what was an adverse financial environment.
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