Montepio sheds 900 in major survival shakeup

 In Banks, News

The Portuguese Government has given the green light to the mutual bank Montepio to shed 400 jobs over the next three years as part of a major restructuring process.

The bank is €56 million in the red, a debt that is only likely to rise after the end of the Government-backed moratoria when impairments and loan defaults are expected to rise.
It means that the Ministry of Employment and Social Security has approved a statute providing staff (up to 400) who leave under an amicable agreement, get the rights to claim unemployment benefit until September 2023.
“The statute of a company under restructuring was attributed to Caixa Económica – Montepio Geral for the period to September 2023 and up to a limit of 400 staff, after an analysis by the Institute of Social Security and the entity that supports SMEs IAPMEI and after consultation with unions and the Portuguese Banking Association,” confirmed an official source at the ministry (MTSSS). However, the bank will shed 900 staff in all through natural wastage such as early retirement and amicable severance packages.
Banco Montepio currently has a restructuring process underway which foresees the shedding of around 900 staff, around 20% of the total workforce at the bank. One part is being done through early retirement, another part is being done through amicable terminations of employment which depended on the Government’s decision regarding Montepio’s application to get the statute of a “company under restructure”.
In December, the UGT and CGTP unions gave a negative report on the application presented by Banco Montepio and levelled criticisms about a lack of transparency in the process, rejecting the claim that social security would finance redundancies at the bank.
They claim the bank “eliminated” information in the dossier supporting the application for a restructuring request, adding that many parts outlining the restructuring plans were placed in annexes which were “privileged and confidential,” the revelation of which to third parties would be “apt to cause high losses in terms of reputation and patrimony”.
In addition to shedding 900 staff, Montepio will close 80 branches in the coming years in an adjustment process which is seen as crucial for a return to profit and organic capital generation at a time when the entire sector is being affected by the Covid-19 pandemic.
Led by Pedro Leitão, Montepio registered losses of €56.9 million in the first nine months of 2020 with a growth in impairments and provisions to meet the risks of the Covid-19 pandemic.