Considering the Bank of Portugal is itself meant to be independent, news that the government means to create a “new independent body in charge of macro supervision and bank resolutions, which is not the Bank of Portugal” has been welcomed with a hefty degree of irony.
The new banking super-entity will “substitute the national council of financial supervisors and the national council of financial stability”, explains Observador.
Perhaps it will somehow manage to dispense with the need for a council of public finances, as well – as it is understood to be upset over that body’s president’s comments about “a miracle” having been involved in finance ministry accounting (click here).
Certainly some PSD MPs see the new moves this way, suggesting the government’s plan is “an attack on the independence of regulators and supervisors of the financial system”.
The PSD’s Duarte Pacheco accused powermakers of putting into practice a scheme to make bank supervisors and regulators “politically subordinate”, reports Observador – adding that Pacheco sees this as something “highly worrying for a democratic state”.
Quoting finance minister Mário Centeno, Observador stresses the new entity “will involve a juridical personality” and “authorities of sectorial supervision” though they will have to be “independent, thus guaranteeing simultaneously the full participation and responsibility of all supervisory authorities in matters of prevention of systemic risk”.
Centeno told parliament yesterday that new entity will also have “analytic and technical supervisory capacity”, says the website, which carries an opinion article on the issue suggesting the changes are all for the best.
“It is a loss of powers”, financial writer Edgar Caetano concedes. “But it is a desired loss for all parts.
“The Governor of the Bank of Portugal Carlos Costa has already defended that it is not advisable for the Bank of Portugal to be responsible for the running of banks that result from resolutions while also being the regulator for the whole financial system”.
Nonetheless, Bloco de Esquerda is baying for Costa’s dismissal, if not his blood.
In a motion which the PS is said to be distancing itself from, BE defends the maintenance of the status quo at the Bank of Portugal on the understanding that the governor is removed.
Two new reasons for what the BE calls the “old adage” that Carlos Costa has exceeded his sell-by date at the central bank were given by BE’s Mariana Mortágua in parliament yesterday.
They involve an investigation that shows that the Bank “ignored warnings” from its counterpart in Dubai over the laundering of Angolan money through Banco Espírito Santo (in the ‘good old days’ before the bank collapsed), and the fact that the Bank “created false expectations” among commercial paper holders in Group Espírito Santo companies, thousands of whom are still suffering massively from their subsequent financial losses.
Photo: TVI24: Finance minister Centeno with less than delighted-looking Carlos Costa
