At last someone in charge has spotted that the Bank of Portugal remains ill-equipped in its role as regulator of Portugal’s financial system, especially when it comes to banking oversight.
Prime Minister António Costa acknowledged today that the current governance system shows deficiencies at the Bank of Portugal.
It's still "doubtful that the Bank of Portugal is properly equipped to carry out the management and intervention for commercial banking," the prime minister admitted, adding that after this week there will be some quiet and serious reflection on the matter.
"The Government should, "try to find a new institutional design - or institutional architecture - that responds to the problems and needs for intervention.”
This is the closest yet any senior politician has come to admitting that the Bank of Portugal under its governor Carlos Costa (pictured) has failed time and time again to fulfill its regulatory role.
In a career marked by indecision, and frequent argument with the stock market regulator CMVM, Carlos Costa maintained a close if tense working relationship with former Finance Minister Maria Luís Albuquerque who frequently had to distance herself from the results of Costa’s errors.
Costa’s solution after BES collapsed, a collapse that may not have happened if he had been regulating the bank rather than maintaining over-cordial relations with its director Ricardo Salgado, was the creation of Novo Banco which Costa hoped to sell on within a year to recoup the €4.9 billion in loans he threwa t the problem.
Despite loading the old BES with toxic liabilities, Novo Banco still was left with 'unquantifiable liabilities' according to a PWC report so bidders went in so low it was embarassing to watch. Novo Banco remains loss making and a testament to Carlos Costa's lack of finesse.
The chances of the taxpayer or the bank supported 'resolution fund' getting their money back when Novo Banco is sold, remains highly questionable.
Lawyers acting for the former Chief Executive of Banco Espírito Santo, Ricardo Salgado, delivered a report in July 2015 which accused the Bank of Portugal’s governor of having an aura that gives him "absolute immunity" regardless of any "mistakes and sins," and which allowed the supervisor to conduct the BES rescue process "negligently and partially."
The report went on to describe the "ruinous management at the Bank of Portugal" for being responsible for the collapse of BES.
For reasons best left to the politicians, Carlos Costa had his contract renewed last year for a further five years, when many in the financial sector fully expected him to be replaced by someone better suited to the job.
The PM's comments today may lead to a review of the regulatory function of the country's central bank, and hopefully a review of its governorship.
The Bank of Portugal's current management has shown time and time again that it is unfit to regulate Portugal's banks with the sort of objectivity and detachment required.
Comments
is it not abundantly clear that the Portuguese system regulation in all its economic and social sectors is totally corrupt and not fit for purpose ?
The elite were not tax evading or the senior taxman would have stressed that. They were tax avoiding - so must have warped the tax laws when these were being drawn up. Building in secret safeguards to allow tax avoidance. Secret in that an average Portuguese accountant would not know about them ... or have they all been sworn to secrecy themselves !
As another commenter has said - how is it that the alleged money of Socrates has not already been seized? Or is it just the interest that is being diverted to some Ministerio Publico Retirement Fund?