The management of Banco Montepio will propose to the general meeting to halve the authorized capital of the institution, from 2.42 billion euros to 1.21 billion euros.
The reduction will be made through a 50% reduction in the par value of each share, which will increase from 1 euro to 0.5 euro.
In a statement to CMVM, the bank, headed by Pedro Leitao, writes that “despite the positive net results obtained in the last financial year, due to the existence of negative accumulated retained earnings, […] it was deemed expedient to submit for approval by the General Meeting an operation to reduce the authorized capital […]to help cover the negative retained earnings of EUR 1,174,686,582.37.
“Through the reformulation of equity sections, negative retained earnings will be fully covered by a reduction in the authorized capital, which will increase the level of funds that are subject to regulatory qualification as distributable, which will create the necessary and sufficient conditions for the company to be able, when possible, taking into account measures introduced by the supervisory authority and adopted by its shareholders, proceed with the distribution of results,” the statement said.
The bank also says that “the proposed adjustment to include retained earnings will not have any impact on equity or capital ratios, so there will be no change to Banco Montepio’s solvency ratios.”
Upon completion of the transaction, the net worth of the institution “will exceed the new authorized capital by 24.8%, i.e. by more than 20%, with a subsequent decrease in the ratio between the authorized capital and the number of issued shares.”
