Banking & finance annual report
Major deals helping to ‘solidify’ Portuguese banking
sector
Caixabank, Bankinter and Fosun deals have strengthened Portuguese banks by providing new capital
at a time when financial institutions need to strengthen balance sheets
Three international deals in 2016 will
help to create a “more solid” Portuguese
banking sector, according to Maria João
Ricou, managing partner of Cuatrecasas
in Portugal.
Ricou, who heads the firm’s banking,
finance and capital markets practice,
says Caixabank’s acquisition of BPI,
Bankinter’s purchase of Barclays’
Portuguese business and Fosun’s
acquisition of a stake in BCP have “given
a new financial strength to the targeted
banks, namely by bringing new capital or
reinforcing existing capital”.
The deals come at a time when much
of the sector faces the challenge of shoring
up balance sheets by resolving problem
assets, including non-performing loans
and badly-performing real estate. “Banks
must address the problem of potential
capital needs that such exposures may
raise, namely as a consequence of the
more demanding regulatory requirements
that have been imposed,” Ricou says.
She adds that another challenge for the
Portuguese banks will be to comply with
the MREL [minimum requirement from own
funds and eligible requirements] and issuing
enough debt in the markets for that purpose.
Meanwhile the full impact of the
disruption to traditional banking models
caused by the burgeoning fintech industry
has yet to be felt, according to Ricou. “The
digital revolution, as well as changes in
financial services is under way, but the
impact on current banking players and
the banking market is not yet clear,” she
explains. “The banks are still moving slowly
in this regard, partly because the regulation
and compliance rules are very strict –
however, it is clear that it will be necessary
to re-imagine the business model in order to
meet the challenges of the digital revolution
in the banking sector.”
Adapting to this rapidly changing
environment, in addition to dealing with
the substantial regulatory changes imposed
on the banking and financial sector, is the
main task for banking lawyers, according
to Ricou. She adds that, despite these
challenges, the outlook is “more positive
than last year”.
Maria João Ricou
Banking sector innovation bringing extra regulatory
responsibilities
The role of banks as financial
intermediaries for new investment
products has grown, while they also
face more intervention from regulatory
authorities and increased litigation,
says Filipa Ruano Pinto, partner at SPS
Advogados in Lisbon.
“Banks are investing in innovation
to deal with demands from a new
type of millennial client,” adds Ruano
Pinto. “Millennials are 20 to 40-year-
olds who don’t go into banks, want to
do everything online and only want to
use th eir smartphone,” she explains.
“This means that Portuguese banks
are having to implement innovative
systems that provide access for
opening new accounts and advice on
new products – these new products
are then subject to heavy regulation
related to consumer protection and
IT security – for example, a major
challenge will be the EU General Data
Protection Regulation that must be
www.iberianlawyer.com
implemented in May 2018.”
In addition, Ruano Pinto says new
fintech companies, client demands and
less burdensome regulation in other
jurisdictions could put Portuguese banks
at a further commercial disadvantage.
She argues lighter regulation in other
jurisdictions will make them more attractive
destinations for potential banking sector
investors and consequently, Portuguese
banks could lose business to companies
in other jurisdictions . Ruano Pinto says
that, in response, Portuguese banks must
find new ways to face these challenges
from competitors by emphasising what
makes them different. “Banking activity
is about trust and traditionally, banks
have always been seen as trustworthy by
clients,” she says. “As banking lawyers, our
role is directly affected by these challenges
– now, it’s not only about helping banks
sell products and maintain relations with
clients, but reinforcing confidence once
again in banking institutions.”
Filipa Ruano Pinto
March / April 2017 • IBERIAN LAWYER • 33