BPI boss critical of increased contributions to Resolution Fund

The CEO of bank BPI, João Pedro Oliveira e Costa has criticised an increase on the annual contribution – basically a tax on the banks – that the sector has to pay to fund the Resolution Fund.

The Resolution Fund was created in 2012, for the purpose of providing financial assistance to resolution measures, providing capital to capitalise Novobanco, adopted by Banco de Portugal. For the fulfilment of its mission, the Resolution Fund has its own funds, mostly disbursed by the banking sector.

The funds provided by the banking sector also created a bridge bank to mitigate the impact off the failure of Banco Espírito Santo in 2014, and several other banks including Banif which collapsed in 2015.

BPI criticised the increase in the banks’ annual contribution to the Resolution Fund. “I no longer liked paying for the dinner I didn’t go to. Presenting changes to the bill now is a bit complicated,” said the bank’s CEO.

The Bank of Portugal announced last week that it will propose an increase in the rate of additional contributions to the Resolution Fund next year to 0.049%.

The fund was responsible for the resolution of BES (2014) and Banif (2015) and the capitalisation of Novobanco (2017 2021), and has loans of €7Bn to pay in the coming decades through the money it receives from periodic contributions from banks.

In the case of BPI, the contribution will amount to around €25 million per year until 2042. João Pedro Oliveira e Costa criticised the model of contributions to the fund. “It’s the same thing if you don’t participate in the party, you get the bill to pay at home and you say you didn’t go to dinner, you didn’t go to the party, you were actually at home watching television,” said the manager.

BPI announced on Thursday a 14% increase in profits to €444 million in the first nine months of the year.