CGD adventure in Spain results in €1Bn losses over 25 years

Portugal’s state-owned bank Caixa Geral de Depósitos is to sale of its operations in Spain after losing €1Bn.

It has reached an agreement to offload its operations there where it has been present for over 24 years.

The sale of its assets, announced on Thursday by the Portuguese government, is included in the public bank’s restructuring and capitalisation plan.

The Spanish bank Abanca Corporación Bancaria S.A. which is based in Galiza and created in 2011 from Novacaixagalicia, will buy the Portuguese bank’s assets in Spain.

Abanca is said to be paying €364 million for Banco Caixa Geral – the name that the Portuguese subsidiary operates under in that country. 

The Spanish deal should bring assets of around €141.5 million into Caixa Geral de Depósitos. in Spain it is worth €597 million and registered €374 million in imparities.

In the first quarter of 2017 Caixa Geral de Depósitos which is led by Paulo Macedo was making a €39 million loss. In the second quarter of this year it made a €126 million profit.

The assets offload in Spain will only be completed next year. For the first time since 2010 CGD will bring dividends to the Portuguese State in 2019 which according to Macedo will be in the region of €200 million. 

Regarding public accounts for 2019, the revenues from CGD will be recorded as “extraordinary receipts” and will strengthen both the bank’s and state’s financial position as capital ratios improve by between 50 and 100 base points thanks to the Spanish offload and the sale of CGD South African assets Mercantile Bank to Capitec Bank.