By CHRIS GRAEME chris.graeme@theresidentgroup.com
The Vice-President of the European Investment Bank, Carlos Costa, is to take the helm at the Bank of Portugal (BdP).
The 61-year-old Portuguese economist will replace Vítor Constâncio, who took over the Vice Presidency of the European Central Bank on Tuesday.
Vítor Constâncio, 67, was, in his time, a secretary of State, a prime ministerial candidate in the 1989 elections, a director of the bank BPI and both Vice Governor and then Governor of the Bank of Portugal for seven years.
Carlos Costa, who served as the international director for BCP and a director at Caixa Geral de Depósitos before becoming the Vice-President of the EIB, was in Lisbon earlier this year when he outlined the causes and consequences of the financial crisis in 2007/8 to various chambers of commerce.
Carlos Costa is taking the helm at the BdP at a critical time when Portugal is faced with its worst economic crisis since the April 25, 1974 Revolution.
Not only are the great American ratings agencies such as Moody’s, Standard & Poors and Fitch paying close attention to Portugal’s external debt and balance of payments crisis (over 100 billion euros) and enormous annual GDP deficit (over nine per cent), but the BdP is expected to closely supervise and regulate the country’s finances after a string of bank mismanagement scandals over the past five years.
Although considered an excellent economist and technical microeconomics wizard, the scandals at banks Millennium bcp, BPN and BPP significantly tarnished the BdP’s image internally and externally and called into question Vítor Constâncio’s ability to adequately supervise the abuses that went on during his watch.
Carlos Costa is now expected to clean up the banking system in Portugal, making it more transparent, answerable to customers and shareholders and enforcing more supervision and regulation.
Another important task ahead of him will be the implementation of new Capital Banking Regulations resulting from Basle III whereby banks will be expected to recapitalise and ensure they have at least 12-15 per cent liquidity in their safes.
