LISBON: Troubled Portuguese state bank Caixa Geral de Depósitos (CGD) on Monday informed the market it had submitted a plan to the State to increase its capital by €5.9 billion to “at least €7.328 billion.” CGD, Portugal’s largest financial institution, has a large portfolio of non-performing loans that means it needs fresh capital to enable it to face the future. In the first nine months of this year, it had a loss of €189.3 million, against a profit of €3.4 billion in the same period of last year.
In a statement filed with the Portuguese capital markets commission (CMVM), CGD said it had been authorised by the European Central Bank (ECB) and the Bank of Portugal “to go ahead with the corporate transactions that are part of the first phase of the recapitalisation process,” and outlined the plan it had submitted for approval by the State.
The state bank said it would “use free reserves and legal reserves, totalling €1,412,460,251.00 to cover the same amount of losses from previous financial years.” “The increase, via new cash injections, in the share capital of CGD of €5,900,000,000.00 (€5.9 billion) will be at least, €7,328,761,040.00 (€7.329 billion),” said the statement filed with CMVM. This increase will be “entirely subscribed by the State in cash,” the statement said.
