The Portuguese Banking Association (APB) today lamented that, “after the vicissitudes it has gone through”, Portuguese banks are placed “in an even more unfavorable situation” vis-à-vis European counterparts by being prevented from applying negative interest on large deposits.
“We are in a situation where banks have difficult operating conditions, where net interest income is completely squeezed and commissions are under pressure and we have new regulatory, supervisory and resolution costs, [além de] restructuring and investment costs for the digital network. It is difficult to understand that the Portuguese bank is placed, after the vicissitudes it has gone through, in an even more unfavorable situation in relation to its European counterparts, ”said APB President Fernando Faria de Oliveira.
Speaking to reporters in Porto on the sidelines of a conference organized by UGT, Faria de Oliveira defended the existence of "a true level playing field" [patamar de igualdade]”For eurozone banking, stressing that“ that is why the banking union was created ”.
At issue are statements made last week, at a press conference in Lisbon, by the presidents of BCP, Caixa Geral de Depósitos (CGD) and Novo Banco calling for Portuguese banks similar rules to those of other European banks, allowing them to start apply negative interest on deposits of large institutional clients.
That possibility has already been ruled out by Banco de Portugal.
However, for APB, "these claims are perfectly justifiable," as Portugal is "the only country in the eurozone where a rule that precludes negative interest on deposits is applied."
“This is perfectly understandable with regard to deposits by individuals and small and medium enterprises, but in fact has little justification for other financial institutions, institutional and large companies. In such a way, there are currently several situations in which large multinational companies make their deposits with national banks to enjoy an advantage that does not happen in other countries, ”said Faria de Oliveira.
For APB's president, it would be "perfectly reasonable for the legislation to be interpreted as allowing the exception of individuals and small and medium-sized companies to charge negative interest to other institutions."
"But, of course, it will be the authorities who will make the final decision," he added.
Considering that the association has already presented “perfectly sound arguments in this matter”, Faria de Oliveira says it “naturally has to respect the positions of the decision makers”, but reiterates that “this puts Portuguese banking at a very significant disadvantage compared to other European banks”.
"The issue is in place, now it is up to those who decide to take their position," he concluded.
Asked about this matter on the sidelines of the same conference in Porto, Millennium BCP chairman Nuno Amado said that this unequal treatment vis-à-vis other European banks leaves Portuguese banks in an “even more difficult situation”.
“Our rules should be similar to the rules of the euro countries. It is a pity that there are no similar rules of play for everyone without going into individuals and SMEs, ”he said, arguing that it is“ appealing to the common sense ”of decision makers.
According to Nuno Amado, unable to charge negative interest on large deposits, Portuguese banks have to try to “partially offset the effects” of this situation by looking at their business model: on the one hand, trying to improve the quality of the credit portfolio, “with less complicated credit and more adequate asset credits, ”and on the other hand,“ with process optimization and cost base reduction ”.
“I hope there is an inflection, because it is not good for anyone to get into the 'japonization' of Europe and have this situation [de juros negativos] to long term. I sincerely hope that this will change over time – which is a good sign that the economy is doing better – but in the coming months it will not happen. I do not know what the current policy term is, but it was good for everyone to start reversing interest rate developments, ”he said.