Banco Totta & Acores (BTA), one of Portugal's leading banks, was in turmoil last January. Its shares were in free fall, its chairman had resigned in a huff and investors were on the point of revolt after the announcement of a proposed dividend abysmally below market expectations.
Historically one of Portugal's most profitable banks, Banco Totta was the first to be returned to the private sector under a government decree that effectively overturned the nationalization policy of Portugal's 1974 revolution.
The market knew that last year - Banco Totta's first full year of operation under new ownership - would be a difficult period of adjustment. But the bank's fall in net profit to Esc15.6 billion ($90.28 million) from Esc17.2 billion in 1995 came as a bitter disappointment. It was generally accepted that sharply higher bad-debt provisions - part of a balance-sheet clean-up - were going to eat into profits. However, shareholders felt they had been let down by a proposed Esc135 a share dividend. The market expectation had been Esc190 (with profits of Esc18 billion forecast by the bank's management during a roadshow for international investors), a payout that would have been in line with the previous year's, thus topping the 6.8%