Development bank launches task force to recover NPLs

Portugal’s development bank Banco Português de Fomento (BPF) is continuing its focus on accelerating the concession of State-backed loans underwritten by cash from Portugal’s Recovery & Resilience Plan (RRP) leading to more credit to companies, but makes clear that it has to look at the “dark side of the moon” at problems that exist within the bank, meaning Non-Performing or ‘sour’ loans.

It is a burden that the bank’s CEO Gonçalo Regalado has inherited and it stands at over €1Bn. To tackle this, he has created a task force to recover as much of these losses as possible that he inherited.

“There is over €1Bn in NPLs we’ve inherited from the past”, said Gonçalo Regalado when presenting the bank’s accounts for the first nine months of the year.

“Part of these loans issued with State approval tot up to €450 million and this is a loss to the State” he said, adding that the bank would be focusing its attentions on the remainder which was recoverable.

“It’s all very nice providing finance, but then there’s the dark side of the moon which are the bad loans”, said the CEO of BPF.

In fact, the percentage of soured loans at the bank amount to a staggering 24.1% compared to just 4% at Spain’s development bank ICO, and 0.01% at Italy’s development bank CDP.

“We’ve got €600 million in impairments that need to be recovered” said the bank manager while adding that “we’ve created a department to monitor and recover debts while revising existing norms based on clear and objective policies.

“We’re setting up a machine devoted to debt recovery in the same way that the commercial banks have” and is the equivalent of 10% of the bank’s total work and involves a team of 60 people”, he added.

“We’ve high expectations because 60% of the companies we’ve loaned to have fallen into default, but are still operating”, he said, remarking that 80% of these NPLs were less than €60,000.