Caixa Geral de Depósitos boss wouldn’t mind buying Novobanco

The CEO of Portuguese public-owned bank Caixa Geral de Depósitos, Paulo Macedo says he will carry on at the helm of the bank for the time being but already has a succession plan in place.

The manger, who successfully restructured the bank after Portugal’s near banking system collapse a decade ago, offloading non-performing loans (NPLs) and returning the bank’s capital margins to a healthy state, says he “would not rule out acquiring a bank, more specifically Novobanco, according to an interview with the channel Now.

And in an interview with the business daily Negócios, he admitted that he had informed the Ministry of Finances that he wanted to continue at the helm of the bank (his term is up this year) and says he will pay back all of the money provided by the State in loans to the bank as soon as he gets the authorisation to do so.

Paulo Macedo also said that the bank is now focusing on improving the bank’s technological transformation.

Since taking the lead at the bank in 2017, Paulo Macedo said that the bank had, prior to that, suffered six years of losses, very low capital ratios, a systemic market share loss, and a “serious problem of governance”.

Between 2016 and 2017 there had been no less than three administrative boards, and that when he had entered to clear up the mess left by years of bad management, most of the previous board members had resigned.

The banker said that CGD had been rudderless and all at sea without a compass at that time, and that in 2016 a restructuring plan was devised to sort the bank out and return it to profit under the previous administration under the authorisation and support from Brussels.

Paulo Macedo says he inherited the plan, but the question was how to deliver it. It had a number of aspects to it that had been imposed by the competition authority which was not considered a State bailout, but nevertheless had to be carried out at a time when it was extremely difficult for the bank to undertake.

Today, the bank has enjoyed eight years of profits with own funds of over €10Bn and core tier one ratios of over 20%.

Paulo Macedo also says that the bank’s governance and management is also in much better shape, even better than the European Central Bank had expected.

The bank’s main problems prior to Paulo Macedo taking over in 2017 was an extremely high 16% NPL rate of total credits conceded, whereas today the bank only has a 1.6% NPL rate and even these NPLs are 100% backed.

And in the las two years alone (2023-2024), the State will receive around €1Bn in dividends. Moreover around 70% of the banks transactions and services are done digitally through its app, and CGD is now the market leader in terms of mortgage loans, private deposits, deposits in general, leasing and factoring, and debit cards. (Partly because it is the largest bank in Portugal; following it are Millennium BCP, Novobanco, Banco Atlantico Europa, Banco Santander Totta, Banco Português de Investimento, Banco Montepio, and EuroBic).

The bank is also hiring again, this time specialists to drive forward its technological revolution in areas such as AI, Big Data and Customer Relations Management.

Paulo Macedo was also elected ‘Banker of the Year’ by Deloitte Portugal. When Paulo Macedo was at the helm of Portugal’s National Health Service (SNS) prior to taking over at the bank, he reduced costs demanded by the Memorandum of Understanding signed with the ‘troika’ of international lenders when Portugal was close to bankruptcy, reduced the price of many medicines, and reduced costs for both the State and patients.

And stresses that cutting costs has a lot more to do with better use of technology than making mass redundancies (the bank let go around 800 staff by 2021 and shed 270 by 2024) and concluded the interview by saying that in 2023 had attended to a 1.5 million calls at its help centre.