Constâncio appointed Vice President of the ECB

By CHRIS GRAEME [email protected]

The Governor of the Bank of Portugal, Vítor Constâncio, has been appointed as the new Vice President of the European Central Bank.

Constâncio, reputed to be one of the highest paid banking governors in Europe on a 250,000 euro annual salary, beat the Luxemburg and Belgian candidates, Yves Mersch and Peter Praet, to the post in a decision made by EU finance ministers on Monday in Brussels.

It means that two European institution top jobs will soon be filled by Portuguese candidates – José Manuel Durão Barroso, President of the EU Commission, and Vítor Constâncio, Vice President of the ECB.

Prime Minister José Sócrates, who said last week that he was “convinced” that the Portuguese candidate would be selected, joined President Cavaco Silva in congratulating Vitor Constâncio.

Constâncio will take over on June 1 from the current ECB governor, the Greek Lucas Papademos, who ends his eight-year term at the end of May.

Critics of Constâncio say that it was under his watch that the Portuguese banking system suffered some of its worst moments of instability in years with scandals in the Millennium bcp, BNP and BPI banks through lack of adequate supervision.

Among the front runners for the now vacant post of Governor of the Bank of Portugal (BdP) are current Finance Minister, Fernando Teixeira dos Santos, ex-minister for the Economy, Manuel Pinho, President of the financial watchdog CMVM, Carlos Tavares, and President of SIBS, Vítor Bento, while one of the current Vice Presidents of the BdP, Dr. José Martins de Matos or Dr. Pedro Duarte Neves, could also be chosen.    

Meanwhile, it emerged at the end of last week that if a motion of no-confidence in the leadership of José Sócrates emerged within the split PS party, the Finance Minister Fernando Teixeira dos Santos could take over at the helm of government.

The idea was mooted in Parliament after the President of Lisbon Câmara, António Costa, and another leading PS militant and Euro MP Capoulas Santos had thrown down the gauntlet to the opposition PSD party to vote for a “no confidence motion” in the government over the Face Oculta (Hidden Face) scandal (read articles on page 10).

Last week, in an interview with the BBC, Fernando Teixeira dos Santos said that the financial markets were “overreacting” to the Portuguese economic and budgetary situation.

He said that Portugal’s current budget deficit, of over nine per cent, had increased in line with the European average.

“Given what has been happening in Greece, they are now focusing on us, but looking at our indices, there are no strong reasons for nervousness,” he said.

“Of course we would be better off with an absolute majority, but, in any case, the opposition parties have given signals of responsibility and have said they will pass our budget proposal for this year and we are attempting to reach a medium-term consensus on budgetary policy in parliament,” he added.

When asked if he thought Portugal would remain in the Eurozone, he replied: “Of course, I think we have a good fundamental basis. We have already implemented important structural reforms in security and public administration and there have been a lot of changes in modernising our country in terms of competitiveness, infrastructure, human resources and education”.