BCP's share price has underperformed the
European bank sector by 60% since January 1999. What are you
doing to address this problem?
The share price is under pressure. This is partly
due to the economic downturn in Portugal. BCP also has some
exposure to the insurance sector and this is another factor.
During this past year when the share price was depressed, the
key issue was the bank's capital ratios. To some extent this
was a self-fulfilling prophesy because capital was depressing
the share price which in turn put added capital pressure on
the bank.
It is now clear is that through our capital increase and rights
issue, we have addressed and resolved this issue. We wanted to
bring our tier 1 ratio up to the level it stood at in March 2001
and we have achieved this objective.
We gave a clear indication that there are other measures in the
pipeline that will reinforce our capital position, such as the sale
of [insurance business] Seguros e Pensões, the securitization
process, the disintermediation of loans and so on. So the market
can now be relaxed about our capital position.
Now the debate is refocused on where the share price should be,
which is based on the bank's underlying
profitability.
What are you doing to boost revenue and
improve efficiency in the current tough economic
environment?
Our efficiency drive reaches right across the group, from
Portugal to Poland and Greece. Retail banking is what we do best
and we are focusing on this in these three main markets. Given our
dependency on outside factors where revenue is concerned, the main
thrust is on reducing costs. We have reduced our headcount by
almost 2,000 in the past 12 months in these three countries and in
our insurance business. This comes after eliminating nearly 4,000
jobs in Portugal in the previous two years. In the case of Poland,
this staff-reduction programme will continue. The benefits of these
efforts are visible in the first-quarter figures, which show a 5%
reduction in staff costs. We were the only Portuguese banks to have
achieved this level of cost-cutting.
Are you happy with your international
business?
Being a small country with a small market, we have no
alternative but to seek growth opportunities abroad. Poland is a
big European market for the future and we have managed to integrate
our operations very well in that country. It would be almost
impossible to achieve the same level of success in mature markets
like Spain, France or Italy. We are still in an investment stage in
Poland and Greece so we don't expect immediate returns from these
operations. But we are confident that this strategy will pay off in
the longer term.
Do you see opportunities in other countries
that are at a similar level of development?
Perhaps if the market environment were different we would
consider using Poland and Greece as springboards for investing in
neighbouring countries. But just now this is not on the cards. Our
objective is to consolidate and grow in these two markets, where we
have stabilized our operating formula. We are on solid ground, with
the Polish bank totally turned around, while in Greece we have
acquired more than 200,000 customers and a tested IT
system.
Are you concerned about foreign banks
encroaching on the Portuguese market?
This is not the best moment for investing abroad or doing
cross-border mergers. Retail banking in Portugal is a difficult
business. Banco Santander bought Totta and Banco Popular acquired
BNC, but we will see in time how profitable those operations are.
We have to accept that our future domestic market is Europe and we
are keeping an eye on movements by other
banks.
Do you see scope for further bank
rationalization in Portugal?
There is already a high degree of concentration in the
Portuguese market. Five banks control more than 80% of market
share, so I don't see the need for more rationalization, but I'm
not ruling it out.