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Montepio’s rating slashed as former finance minister accuses foreign investors of “strategy of devaluation”

With more bad news today for Portugal’s beleaguered banking sector, a former finance minister and vice-governor at the Bank of Portugal has claimed that foreign investors have embarked on a strategy of devaluing Portuguese banks in order to buy them up – sometimes for a song – when they crash.

João Salgueiro’s comments came as leading ratings agency Moody’s downgraded the investment status of Montepio Bank by two points (from b1 to b3), reducing it to the so-called rubbish category.

The agency justified its decision on the basis that Montepio’s credit situation had deteriorated in terms of risks and active returns which, in turn translates into a weakening of its capacity to absorb risks in spite of the recent recapitalisation of €270 million, explains Público.

In more plain-speak, it means that Montepio’s bad debt has increased significantly, while losses recorded in the last two years have been serious and increasing. 2014 saw a loss of €185 million, with 2015 registering – €242 million.

Putting the boot in, Moody’s added that Montepio’s restructuring efforts could take some time to kick-in, “given the weak operational environment in Portugal and the bank’s limited capital resources”.

Financial expert Salgueiro appears to be having none of this, however.

Talking to Lusa, he claims there is basically a plot underway “on the part of foreign investors who are interested in strengthening or entering into the capital” of Portuguese banks.

Mentioning BCP, he said there was “a lot of interest and a strategy to make the bank lose value” – adding that the strategy of devaluing Portuguese banks before they are sold is generic.

What is important, Salgueiro affirmed, is that “Portugal’s meagre savings are put to the service of growth and employment in Portugal, bearing in mind the fear that foreign shareholders do not contribute to this in an active way”, explains Económico.

Writing in collaboration with Lusa, Económico adds that Salgueiro met yesterday with parliamentary leader Eduardo Ferro Rodrigues to formally present the manifesto “Reconfiguration of the Bank in Portugal – Challenges and Red Lines”.

It is a manifesto signed by leading thinkers in Portugal, including former PSD finance minister Manuela Ferreira Leite, and considers it “urgent to combat the excess of European authoritarianism and stop banks being controlled by any one foreign country”.

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