Change font size:   

 
FX poll 2008:

FX poll 2008:

FX moves to centre stage

Sovereign wealth funds on euromoney.com

Sovereign wealth funds on euromoney.com

The facts and figures revealed by Euromoney are used by many other information providers today.

June 2003

Focus lies abroad


Euromoney's Jules Stewart talks to Jorge Jardim Gonçalves, chairman and chief executive of Banco Comercial Português, Portugal's largest bank, about how he intends to move it forward following recapitalization.




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.






It always reminds me of a criminal line-up: ‘Oh look, the usual suspects are here’

A fund manager in Hong Kong on the small world of bidders for big-name private equity deals

Ruromoney Jobs Post a job