The prohibition of exposure to related parties, review of the “disgust period” between regulatory and regulated functions and more collaboration with the parliament on banking information are some of the preliminary recommendations of the commission of inquiry to Novo Banco.
The deputy rapporteur of the Eventual Committee of Parliamentary Inquiry into the losses registered by Novo Banco and imputed to the Resolution Fund, Fernando Anastácio, presented on Tuesday morning to the other deputies the preliminary version of the final report of this commission, a document of more than 400 pages to which the agency Portuguese had access.
The parties will now be able to submit proposed amendments until Friday, starting the discussion of the final report on Monday of next week.
Closing the document, the rapporteur proposed 10 recommendations, the first of these being addressed to Banco de Portugal (BdP).
“A exposure to major risks the related part emerged as one of the determining causes of the collapse of BES. The need to reduce or even end this type of exposure is an essential measure, in particular, to make the relationship of companies in the so-called mixed conglomerates healthy”, he argued.
Thus, it is suggested to the supervisor in this preliminary version that “to propose to the ECB and the Government, regarding the great risks to related parties, the prohibition of this type of financing, even if creating a transition period for this purpose”, or, alternatively that “this type of financing is of a residual nature, never exceeding 5% of consolidated own funds”.
Also the question of “revolving doors” was a topic under discussion in the inquiry committee, the document referring to that, despite not being impediments, “several situations of alternation between the exercise of functions in the regulator, in the regulated, in the auditor were identified”, which raises “obvious constraints” , in addition to being understood by public opinion “as a discrediting factor for institutions and their professionals”.
“The BdP is recommended to revise the so-called “disgust period” applicable in the transition between regulator to regulated functions, without prejudice to the pattern that is followed by the Single Supervisory Mechanism – SSM, which proves to be insufficient”, he proposes.
Another of the rapporteur’s proposals concerns “a better and effective parliamentary scrutiny”, being necessary to “extend the duties of collaboration with the Assembly of the Republic” in accessing banking and supervisory information subject to the duty of secrecy.
To the Government, BdP and Resolution Fund (FdR) it is proposed “the cessation of the situations verified in relation to the auditor of FdR, Novo Banco and Nani Holdings”, which is the same, as well as “in relation to the company contracted by NB and FdR for Verifying Agent”, who had provided services to the Ministry of Finance in the context of the process of sale of the bank to the Lone Star.