The government has closed in on the Montepio theme and does not say a word about the latest developments around the bank, which raised many eyebrows with the announcement that it will lay off hundreds of workers. Appointed as one of the banks most vulnerable to the impact of the current crisis, Montepio advanced with a restructuring plan to cut costs. The news that BCP would be available for a merger with the bank – however denied – has thrown more fuel into the fire of uncertainty surrounding the institution, which is owned by the country’s largest mutual association.
Asked about the situation around Montepio, the Ministry of Labor for Solidarity and Social Security referred to silence. This Ministry is also part of the responsibility of Montepio Geral – Associação Mutualista, which manages the savings of around 600 thousand members. Altogether, Mutualista’s net assets were over 3.4 billion euros at the end of 2019. As for the Ministry of Finance, it also declined to say a word about the bank’s intentions to move forward with the redundancies. The two Ministries also do not comment on how the possible impact of the news on the evolution of savings managed by Mutualista is being monitored.
Contacted, the Association guaranteed that “naturally the news published about Banco Montepio or Associação Mutualista impacts the community of associates”. “Even so, the variation registered in the subscription and reinforcement of modalities is significantly positive”, he assured, without giving further details, namely on requests for redemption of savings plans. Mutualista sells savings and protection plans to its members. The products are distributed by Banco Montepio. These plans are guaranteed by the assets of Mutualista, which, at the end of 2019, guaranteed to have a coverage level of 124 euros in assets for every 100 euros of liabilities.
Mutualista is also supervised by the ASF-Authority for Supervision of Insurance and Pension Funds. Yesterday in a hearing in Parliament, the president of ASF, Margarida Corrêa de Aguiar, indicated that she is already analyzing the Convergence Plan that Mutualista entered into the regulator with a view to integration with the insurance activity regime, which will only happen in 2030.
Meanwhile, Mutualista will hold its Extraordinary Shareholders’ Meeting on Wednesday to approve the 2019 accounts and amend the member benefits regulation. If the meeting does not have a quorum, members will meet again on October 15th. In 2019, Mutualista ended the year with historical losses of around 400 million euros.
Montepio is seen as one of the Portuguese banks most exposed to the sectors most affected by the crisis caused by the measures adopted by the government in the context of the pandemic. In July, the rating DBRS lowered Montepio’s long-term debt rating to “B”, which corresponds to a downward revision of three levels. On October 6, the bank will present its plan to workers, which involves closing dozens of branches and dismissing up to 900 workers.
The goal is to cut costs by 20%. In the first half of this year, the bank recorded losses of 51.3 million euros compared to a net profit of 3.6 million euros in the same period of 2019.
Asked if it is concerned about the situation around Montepio, Banco de Portugal did not answer the questions of Dinheiro Vivo (until the closing time of this edition).
As for Mutualista, it guarantees that the bank is solid. “Banco Montepio has capital solutions tailored to your needs. These solutions involve the optimization of existing capital in the regulatory context, which also allows it to be adapted to the circumstances ”, he pointed out in response to questions of Dinheiro Vivo.
As for starting a consolidation operation, both Mutualista and the bank denied it. “Banco Montepio is an integral part of the Montepio Group as a whole, either because it forms the distribution network of Associação Mutualista, or because its capital is the savings of its members, or because it is a service provider to Associação Mutualista, or even because its customers are, fundamentally, the associates ”, said Mutualista.” For all these reasons, the Bank assumes a high strategic relevance for the Association, constituting an asset whose value in use is much higher than the market value. The sale or merger scenario does not arise, ”he concluded.