‘Cuts all the way’ in crippled CGD’s recovery plan

It is going to be a long, hard road for State bank Caixa Geral de Depósitos where losses last year ‘doubled’ on those of 2015, and closed at just under €2 billion. But the ‘good news’ is that Brussels has given the ‘green light’ to the government’s recovery plan, and now it is ‘just’ a question of knuckling down and getting the job done.

Says Dinheiro Vivo, “to go forwards, the bank will have to cut, and cut well”.

By 2020, it will lop 25% of its outlets, and the same amount of its staff.

“The 650 branches will be reduced to 470, with the 8,868 staff coming down to less than 6,700”, while the State will be ploughing €2.5 billion into the bank as part of an overall €3.9 billion recapitalisation.

New man at the helm, Paulo Macedo (pictured above) – the former PSD ‘health service hatchet man’ during the austerity years – will be overseeing what he admits will be “a radical change in terms of structure and costs”.

Recapitalisation is not enough, he explained. “CGD will not start to show positive results simply from this. It will only happen when the whole transformation has been done”.

The bank will have to “change its attitude towards risks”, he said – using commendable diplomacy considering the profligate lending of the past – and this will mean branches are “not found in every borough of the country”.

As little as possible is spent dwelling on the worst of the bad loans, but just the top 10 involve debts of over €2 billion that are taking years to make good.

With the sun creeping behind gathering clouds in the skies this weekend, next week will see another ‘ding-dong’ in parliament as Opposition MPs demand explanations from finance minister Mário Centeno and CGD president Paulo Macedo over how the Caixa’s losses could have doubled in just one year.

Needless to say, ‘it could have been worse’. President Marcelo has told reporters that European institutions had feared losses would be closer to €3 billion.

[email protected]