CGD CEO warns of ‘tsunami’ of defaults
The CEO of Caixa Geral de Depósitos, Paulo Macedo, warned on Monday that there could be a ‘tsunami’ of credit defaults when bank moratoria end, if additional support to the sectors most affected by the crisis is not provided.
Speaking at a webinar ‘Investment, Digitalisation and Green Financing: the Portuguese Case’, organised by the European Investment Bank (EIB) and the Bank of Portugal (BoP), Macedo warned that after years of cleaning up the banking sector’s balance sheets, there could now be an increase in NPLs.
“In Portugal, with the end of the moratoria, we have to ensure that the right companies are helped to avoid a tsunami of NPLs,” he said.
Paulo Macedo added that sectors such as tourism, which have been practically paralysed since the beginning of the pandemic, need additional help to meet their overheads
Nevertheless, the president of CGD highlighted that bank institutions this time were “part of the solution” unlike what happened in the previous crisis, emphasising that it was prepared with capital and liquidity to face the crisis.
The EIB also presented the results of its latest annual investment report and survey on investment in Europe and Portugal in which it concluded “almost half (47%) of companies in Portugal expect to invest less because of Covid-19.
Furthermore, around one-third have either abandoned or postponed plans to invest because of the pandemic, less than the European average, however (35%), while almost one-quarter (24%) of companies expect to retain at least some of its investment plans, but on a reduced scale, although still above the European average (18%), according to the same communication.