These are the wishes of the bankers for the coming new political cycle. Legislative elections are scheduled for January 30. The heads of the largest banks in Portugal are calling not only for “vitality”, but also for the possibility of reform.
The topic of the new policy cycle was part of the first debate at the 5th Money Conference Banking 2022 – Testing, Customizing and Growing, organized by DV / DN / / TSF in partnership with EY, Sage and Iberinform, which took place yesterday. … Miguel Maia, Executive Chairman of Millennium BCP, Paulo Macedo, CEO of Caixa Geral de Depósitos (CGD), António Ramallo, CEO of Novo Banco and Francisco Barbeira, Member of the BPI Executive Committee, moderated. supervised by Rosalia Amorim, director of Diário de Notícias.
Paulo Macedo believes that Portugal needs “the potential for transformation” and that there is “the opportunity to carry out reforms.” For a manager, “what matters is that the new staff can make decisions.” Paulo Macedo said he hoped to speed up the implementation of the proposed measures. “The country cannot stand still.”
Francisco Barbeira, a member of the BPI Executive Committee, believes that this moment “was necessary for the promise of political stability” and that “it was necessary for us to create a new framework for political stability.”
On the other hand, Antonio Ramalho, executive chairman of Novo Banco, said that democracy has its own rejuvenation mechanisms. Miguel Maia, CEO of Millennium BCP, followed suit: “I really appreciate stability. But I value vitality even more, ”he said. And he supported the decision of the President of the Republic, Marcelo Rebelo de Sousa, to schedule early elections for January 30 next year. “In my opinion, the theme of sustainability resonates with stability,” he said.
The important role of defaults in the crisis
During the discussion, bankers emphasized the role of the moratorium in the crisis caused by the measures taken to combat the pandemic. The main message was that there has been relative calm regarding the evolution of moratorium management. This was demonstrated in the presentation by Paulo Macedo, who noted that banks need at least six months to obtain specific data, namely on companies, but so far the signs are positive, with a low default rate. And this is possible, added the CEO of CGD, because the companies prepared in advance, and the bank itself did all the work to attract customers (legal entities and individuals), even restructuring several loans. “There are several solutions that make it relatively easy for us to view the default values,” he concluded.
Miguel Maya, in turn, highlighted the difference between the interest rates applied to Portuguese companies and families, and the interest rates applied in other European countries. And he added that it is very important to ensure the conditions so that companies can operate “not on a local, but on a global scale,” with risk differentiation. The CEO of Millennium BCP took the opportunity to warn that Portuguese banks cannot travel abroad to minimize risk. And in the question of whether they are based in Portugal or not, the only question is one: there are conditions, “and today they have no conditions.”
The topic of profitability in the banking sector was also touched upon. This is one of the challenges facing the sector as profitability is at historically low levels.
According to Francisco Barbeira, current levels of profitability “are not adequate levels for capital reward that banks should have.” “If we want to keep a strong bank, we must look at profitability,” the banker said. On the public finance front, the BPI administrator defended that “fiscal austerity and deficit control will be on the agenda again” after the 2020 crisis, stressing that “this is absolutely important.”
Miguel Maia, on the other hand, defended the rate hike. He stressed that negative interest rates “do not reach companies.” “I would be happy, in terms of interest rates, if there was an increase approaching zero. This would be beneficial for the Portuguese economy and the economy, ”he said.
For his part, the executive chairman of Novo Banco warned that the changes in consumption patterns caused by the pandemic pose a risk to some companies that are still vulnerable to the crisis, which is a risk. António Ramalho recalled that the pandemic has led to “acceleration of realities” such as digitization and climate problems. But “the pandemic has accelerated changes in consumption patterns” and “demand patterns” that “could lead to serious disruptions for companies,” the Novo Banco CEO warned. The banker warned that the changes could affect companies still struggling to recover from the 2020 crisis.
Ramalho also warned that “there are signs of accelerating cyclical risks” such as rising inflation, rising transportation costs, disruption to the supply chain and “some changes in the cost of raw materials.”
