Novo Banco or a new bank?

Over recent months, I have somewhat incredulously witnessed developments in the BES saga. To any Portuguese citizen, BES has always been a part of their lifes. Almost nobody falls beyond their universe that extends far beyond the bank itself. How about the insurance company Tranquilidade, for example? Who doesn’t know it? Throughout many years, I was a client of BES both personally and through the organisations that I was a member of. Was this because BES was the best? No, because it was above all else big. In my case, I opened an account at the BES branch in Saldanha in Lisbon because my father knew the manager. Not for any professional reasons but because they had met at a school lunch reunion and, despite differences in age, had since become friends. Indeed, there was always someone who knew someone who knew the bank or was known to the bank. 27 years ago, that BES in Saldanha had a veritable regiment of persons working there. Even if only counting those on public view, there must have been around thirty persons working in an expansive working environment. How banks have changed… Today, the branch must have a total of four persons on a full-time basis and each with their own office. A bank job used to be synonymous with a safe and rosy future.

The abrupt fall of a benchmark institution, with a history reaching back over 140 years, leads us to think about whether all of our apparent certainties are not in crisis

BES was one of the big banks, a symbol of stability and power. The abrupt fall of a benchmark institution, with a history reaching back over 140 years, leads us to think about whether all of our apparent certainties are not in crisis. I am no specialist on banking issues but I do have to know a thing or two or at least I should do. At least I thought I knew and in my defence I would put forward a subject I studied at university: “Cash and Credit”. Here, the principles underlying the banking system were taught by a professor whom I still recall today with admiration: João Costa Pinto, who, in addition to being an excellent professor, had already held leading management positions whether at the Bank of Portugal or at Caixa de Crédito Agrícola, among others. The issue arises out of the idea that he conveyed of a banking system that was the epitome of respectability and reliability. Private sector financial systems are run by people and people are rational and, even while not exempt from risk, help societies function better. However, in recent decades banks have slid from being respectable entities to businesses very much under suspicion. This logic turned the financial system from being an instrument at least to a large extent of good repute into something that to a certain extent became self-replicating. Thus, its operations have multiplied and become enveloped in bureaucratic, business, spatial, fiscal and technical complexities that apparently combine to justify them and extend far beyond the normal needs for the financing of the economy with money accumulating to persons and institutions. Furthermore, sooner or later, this also ensures that others, many, many others, end up losing money. We live today in the midst of all of these whirling operations, whether here, there or anywhere. The moment had simply arrived for BES to lose.

The same moment has also arrived to better grasp just how far we have strayed from that which would render the financial system healthy. This shall not be easy because we have veered off so far. Today, what we want on this issue is not, to all intents and purposes, fair. We cannot want, as creditors to the banking system, the highest interest rates possible without showing due concern in ascertaining just how they are generated and justified on pains of being indirectly conniving with fraudulent or speculative operations that we all know will end badly. As citizens, we should be concerned with every aspect involving the banking system as this may very easily explode (as visibly before us now) into our own finances. In various different countries, there are now organisational initiatives within the financial system to attribute priority to facets such as transparency and honesty. We should follow such efforts and unite to ensure that these development also take place in Portugal.

About the author

Antonio Veiga: Born in Lisbon, has a degree in economics. Currently works in accountancy; member of the management of the Guinean Association for Social Solidarity for more than 20 years. Lives in Lisbon..