Banking: partner or competitor of companies?

It is important to evaluate the investor no longer just by what it sets in terms of capitalization, but mainly by the strength of his business ideas.

In April, our main banks - BPI, CGD, BCP, Novo Banco and Santander - made a “clear commitment to support the Portuguese economy” to face the crisis caused by the pandemic. Furthermore, the bank guaranteed that, in addition to streamlining public support implemented by the Government, it would present financing solutions "of its own initiative".

This banking commitment is fundamental to the country's economic recovery. We only have a competitive economy again with a banking system that companies can trust and rely on. Banks have to act as real business partners - sharing risks, resources and know-how with viable companies that create value. In this way, banking will be helping not only to protect companies and jobs in this difficult time, but to relaunch the economy in the post-Covid-19 period.

Moreover, the banking system plays an important role in the Government's package of measures for the economy, in particular in subsidized credit and in credit default. We already know that the first line of credit for companies (Capitalizar), of 400 million euros, sold out at the end of April and that the banks received more than 300 thousand requests for moratoriums for payment of credits, which corresponds to 25 billion euros. euros (10% of the total credit granted).

However, there are many complaints from companies regarding the performance of banks during the health crisis. The business community has had difficulties in obtaining financing in an expeditious and fast manner, due to the excess of bureaucracy in accessing credit lines guaranteed by the State. There are even entrepreneurs who complain that they have been asked for documentation not required by the rules stipulated by the Government for subsidized credits. But the main obstacle is the high cost of loans, which can reach interest rates of 4% (although banks can finance up to -0,75% from the ECB).

Portuguese banking is rightly recognized as one of the most modern in Europe, thanks to the quality of its services. However, it suffered a severe shock during the 2008-2009 financial crisis. The banking system then entered a deleveraging process, which led to an abrupt reduction in loans to companies and families. And despite the ECB's efforts to capitalize European banking, national financial institutions were faced with quite complex problems: bad loans, capital needs, shareholder instability, low profitability, public discredit ...

Therefore, it is possible to perceive some caution and guarantee of the bank in the allocation of credit, not least because many companies have plunged into this overly indebted crisis. However, and not wanting to align with the demagogic attack that certain ideological sectors are doing to banking, I hope that the banking system will in fact assume its social responsibilities and be less conservative in corporate financing.

In the face of the emergence of an unprecedented economic crisis, banks are required to be open and creative in order to find financial solutions that are adequate to relaunch the economy in the current context of a simultaneous fall in supply and demand. Banks should not limit themselves to financing companies' investment operations based solely on their assets. It is important to evaluate the investor no longer just by what it sets in terms of capitalization, but mainly by the strength of his business ideas. This means that the bank must be a partner of the companies, instead of competing with them for a scarce resource in Portugal - capital.

Article originally published in the print edition of O Jornal Económico of 22 May.

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