Governor of Bank of Portugal “should resign within days”

As pressure on Carlos Costa, governor of the Bank of Portugal, increases, Socialist MP Ascenção Simões has gone on air to say the bank regulator “should resign with the next few days”.

Costa’s latest decision to consign almost €2 billion of senior bonds to oblivion shows “we have come to a point where the presence and maintenance of the Governor of the Bank of Portugal has become unsustainable”, Simões told ETV at 9pm last night.

Likening Costa’s management to “navigating by sight”, Simões stressed that the “Sr. governador” of the country’s central bank “has not realised anything that has happened in BdP… He did not have any kind of contingency plan for BES” and his way of dealing with problems has been “improvisation after improvisation”.

“We need to find another person who can give the Bank of Portugal competence to satisfy international creditors, credibility and who can replace a perspective of normal relations with the government, which is essential” for the workings of Portugal’s financial system, said Simões.

“Portugal isn’t Venezuela!” he added, referring to remarks in the Financial Times earlier this week. “We haven’t failed on any of our promises to international creditors” but Portugal “has to guarantee the credibility” of its financial system and, as such, Costa’s controversial bond dump – coming out of the blue, over a year after the good bank/ bad bank carve up – has been “extremely damaging”.

In fact, so damaging that no one yet has properly evaluated the consequences.

Thus, it is time for the Governor, in place for the last five and half years – on whose watch BPN, BPP, BES and Banif have collapsed – to “take responsibility and resign within the next few days”.

This is the opinion of many of the people who analyse the country’s financial situation, Simões added, though the burning question as to whether Costa’s resignation could change things for affected bond investors remains to be answered.

Watching the broadcast, a source for the association of private bond holders (see earlier story) said: “the government is finally saying something useful!! We are going to increase the pressure on all political parties”.