State bank loses millions from investments

PORTUGAL’S LARGEST deposit bank, state-owned Caixa Geral de Depósitos (CGD), lost around 90 million euros last year because of the subprime crisis.

The admission was made by Faria Oliveira, the new President of CGD, on Monday February 25 when the bank presented its Annual Accounts Report for 2007.

Despite the losses, CGD succeeded in making the highest profits of any financial institution in Portugal in 2007 with a whopping 856 million euros, up 16 per cent on 2006.

Caixa Geral de Depósitos is the first Portuguese bank to announce losses because of the subprime crisis, which has seen an estimated 300 billion US dollars wiped of the value of companies and financial institutions worldwide in eight months.

However, despite the losses, the bank was rated between AA and AAA in financial security league tables, the highest ranking that could be awarded by rating companies such as Standard & Poors and Fitch and Moody’s.

The subprime losses have been compensated by “the sale of shares held in Euronext worth 30 million euros, and in cement company Cimpor (19 million euros)”.

Speaking on a cautious note, Faria de Oliveira said that expectations would have to be moderated in 2008 in relation to 2007. “It will be difficult to exceed or attain the same level of performance that we’ve succeeded in obtaining in the past few years if the crisis persists,” he warned.

The CEO also revealed that the bank’s Strategic Plan for 2008-2010 would be unveiled on March 10.

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