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Portuguese backlash against Spanish banks

Manifesto decries foreign control; signatories call for local bank.

A backlash is brewing in Portugal against foreign encroachment into its banking sector, after CaixaBank launched a second tender offer for Lisbon-based BPI amid rumours that Spain’s largest bank also plans to take over Novo Banco.

The government’s preparedness to watch wide swathes of its financial services sector fall under Spanish control could be seen as a pragmatic and commendable way to address a predicament that has plagued Portugal for too long. 

CaixaBank, on launching its tender, asked the European Central Bank to suspend its administrative proceedings against Banco BPI related to the Portuguese lender’s excessive concentration of risks in Angola. Meanwhile, Novo Banco continues to shed real estate assets and equity stakes to pretty itself for sale to a strategic buyer.

Implacably opposed

But it does not sit well with those who are implacably opposed to what they regard as the unforgivable surrender of Portugal’s sovereignty over its banks. 

These include a group of 60 or so businessmen and economists who have collectively signed what is described locally as a manifesto protesting against the so-called Spanish-ization of the Portuguese banking industry. 


Bruno Bobone, CCIP

Bruno Bobone, one of the signatories to the manifesto, is president of the Portuguese Chamber of Commerce and Industry (CCIP), which has been a strong supporter of the campaign to limit the concentration of overseas ownership of the local banking industry.  He says that it is a misrepresentation to interpret the manifesto as an anti-Spanish lobby, or even as one that objects to foreign participation in the Portuguese banking sector. He does, however, acknowledge that the publication of the manifesto has been motivated in part at least by the conviction among its signatories that the ECB wants to see Novo Banco sold to a Spanish buyer. 

“We don’t have anything against Spanish investors buying banks in Portugal,” Bobone says. “But what we don’t want to see is all the power within the financial sector in Portugal being concentrated among investors from a single country.” 


The manifesto is a protest that has attracted ridicule from some Lisbon bankers, who say that the majority of its supporters are retired, and that many are former policymakers who contributed in one way or another to the mess that the banking system is now in.

That may or may not be a fair critique. But it’s hard to argue that the lobby lacks pedigree, influence or credibility. Along with four former finance ministers, the manifesto’s supporters include an ex-chairman of TAP and a one-time president of Caixa Geral de Depósitos (CGD). With an ex-foreign minister, a former governor of Macau and a previous ambassador to Brazil and France also putting their name to the protest, the architects of the manifesto can hardly be described as xenophobes. 

So keenly do the signatories feel about the threatened loss of Portugal’s control over its banking industry that some are putting their weight behind a proposal to create a new bank backed by private Portuguese capital.

“We believe we need a Portuguese bank, which is based in Portugal and can support Portuguese industry, especially in the SME sector,” says Bobone. 

One option, he says, would be to encourage Portugal’s largest private sector bank, Millennium BCP, to acquire Novo Banco. 

BCP’s chairman, Nuno Amado, has acknowledged that it would be interested in Novo Banco, but that its hands are presently tied by EC state aid rules. These bar BCP from making any acquisitions before repayment to the Portuguese taxpayer of €750 million of CoCos due in 2017.

Even were this impediment to be lifted, however, Lisbon-based analysts doubt whether BCP would have the firepower to absorb Novo Banco in its entirety. 

Failing a BCP-Novo Banco tie-up, which would create a local powerhouse with majority Portuguese ownership, plan B for the supporters of the banking manifesto would be the establishment from scratch of a new bank controlled by local shareholders. 

Lift off

Bobone, who reckons a new player could achieve lift-off with capital of between €2 billion and €3 billion, rubbishes the objection that there simply isn’t enough capital available domestically to establish a local bank that would satisfy EU capital requirements. 

He does, however, recognize that the track record of the Portuguese financial services sector may lead some investors to think twice about supporting a new bank. 

“Availability of capital is not the problem,” Bobone says. “The challenge is creating confidence in a project of this kind.” 

Another challenge would be finding a name for a new bank, given that the obvious candidate – Novo Banco – has already been taken. 

At a time when so many are eager to push through consolidation in the system, a new bank may be the last thing Portugal needs. But local bankers say that if the country tolerates the loss of sovereignty over its financial services sector, then other industries may be the next dominos to fall. 

“I don’t think Brussels and Frankfurt care very much about who owns the Portuguese banking industry,” says one. “But if we don’t care either, will the same thing happen to our industry and services?”