CGD in €125 million reckless lending to Isabel dos Santos

 In Banks, News

Yet another case of less than stellar lending choices has been levelled at state-owned bank Caixa Geral de Depósitos.

This time it has been revealed that CGD lent €125 million to Angolan tycoon Isabel dos Santos without carrying out any due diligence on her company’s financial capacity to service and pay back the loan.
There is a report from the bank’s Risk Department showing clear doubts in relation to the operation according to Portuguese daily Correio da Manhã.
The loan was to enable Isabel dos Santos to buy shares in NOS and was granted on tighter conditions than for the loans granted to art collector Joe Berardo.
The loan operation was revealed in a Bank of Portugal report from 2011 into CGD loans in which the loan to the Angolan businesswoman was criticised.
“The fundamental checks and requirements for granting such loans like guarantees because of a lack of information on the financial situation of the borrower (Isabel dos Santos) are not compatible with a prudent credit concession policy” states the bank supervisor and quoted by CM.
The credit was approved at the end of 2009 when CGD was managed by Faria de Oliveira, with the bank accepting the actual shares Isabel dos Santos intended buy using the CGD loan as guarantee collateral.
Using this loan, Isabel dos Santos strengthened her position in the media and communications operator Zon (today NOS), acquiring 10% of the capital. Part of the acquisition was done buy purchasing 2% of CGD itself and 3.43% in Cinveste.