“BdP has to become synonymous with action to face the countless challenges in the near future. But you must not face them in an ivory tower, but with all Portuguese society ”. Mário Centeno's sentence points to the path he wants to take ahead of Banco de Portugal (BdP), even in the face of criticism and resistance from all parties - with the exception of the PS -, while casting subtle barbs at the regulator's intervention in recent years.
In the mandatory hearing by law, which took place this Wednesday, after the Government's appointment to succeed Carlos Costa, the former Minister of Finance revealed, before the deputies of the Budget and Finance Committee, clues about what he intends to be. his mandate: a strong, intervening regulator, with a strong influence in Europe and working together with the Executive.
In listing the “four key challenges” that he believes the BdP faces, Centeno showed where he wants to go: “ensuring efficient and demanding prudential and behavioral supervision that accompanies the technological innovation process”, “participating in the conduct of policy European monetary policy and its strategic review "," define a macro-prudential policy in line with the complex risk transmission mechanisms in the financial system "and" give credibility to the resolution mechanism and process, a condition for financial stability ", he said.
“Banco de Portugal's role cannot be characterized by antagonism or isolationism, but rather by complementarity with the Government, the other financial supervisors and the scientific community”, he said.
Centeno challenges the idea of being “governor with his hands tied”
In a hearing marked by the express opposition of the parties to his nomination, who allege conflict of interests, Centeno stressed that “independence is not granted, nor is it proclaimed, it is achieved in action and it is the duty of those who benefit from it to show that they deserve it and exercise it before the society".
Most of the deputies present fear that the Minister of Finance will carry with him conflicts of interest in the short trip from Terreiro do Paço to Praça do Comércio. André Silva, deputy of the PAN, was the most proud in this matter, listing a set of situations that went through the hands of the former Minister of Finance and that he will be able to revisit eventually if he is the next governor of the BdP.
André Silva argued that the acquisition of the entire BPI by the Spanish Caixabank, the entry of the Chinese of Fosun in the capital of Millennium bcp and the sales of Banif and Novo Banco will be conflicts of interest that will make Mário Centeno a “governor with his hands tied. ”.
But the former ruler dodged the attacks. Not only "there is none in the whole world that identifies conflicts of interest in these circumstances", but "the Honorable Member listed a set of situations that were decided by the BdP."
“Banif's resolution was decided by the BdP. The resolution of [BES] and the sale of Novo Banco were decided by BdP. These decisions are decisions of the board of directors of the BdP and by bodies supervised by the BdP such as the Resolution Fund ”, argued the former head of national finance.
André Silva also fears that the current members of the BdP's audit board, which assesses the governor's performance, may lose impartiality because they were appointed by Mário Centeno and the latter again defended himself. “It is the first time that the chairman of the audit board is not a former member of the board of directors of BdP. They are people who are above suspicion and if you read the reports, you will not only see an increase in quality and transparency ”, adding that you are confident that the members of the BdP audit board will know how to act if they feel that the impartiality signs of fragility.
And on the possible weakening of the BdP vis-à-vis the Government, whose portfolio of Finance currently belongs to the former right-hand of Minister Mário Centeno, João Leão, the former governor stressed that the Executive and banking supervisor “do not have conflicting interests”. The first, he said, "is the guarantor of the promotion of financial stability", while the second has the duty to "advise".
Mário Centeno also guaranteed that, if conflicts of interest “materialize”, he will “scrupulously comply with the BdP code of conduct” and also the respective organic law and “all the obligations he has in society”.
Moreover, the former Minister of Finance praised the “crucial, leadership role” of governments in promoting financial stability and explained that, under the terms of the organic law of the BdP, the supervisor must “watch over financial stability and advise the government. This is the harmony that must exist between the two to guarantee financial stability ”.
“It was difficult to understand in Portugal that the Government is the main guarantor of financial stability”, recalling the “absolutely essential” role of the Government in the processes of resolving Banif and selling Novo Banco and also injecting capital into Caixa Geral de Deposits and stressed that, if he effectively becomes the next governor of the BdP, he will perform his duties in close liaison with the Government.
“I remember that when we took office [in November, December 2015], the dialogue with the European Commission had been turned over to the BdP and the Government had left this role. This is the type of institutional disruption that cannot happen at any time and, as a leader of the BdP - if it does happen - I will guarantee that there will not be that position of isolationism or confrontation that will prevail in Portuguese society and in the sector financial, ”he said.
"It is very important that the relationship between supervisors changes"
Another of the cornerstones of a possible conflict of interest pointed out by the deputies was the proposal for the reform of the supervision, which ended up not advancing because it was ready near the end of the previous legislature. On this topic, Mário Centeno again defended a change in coordination between supervisors, considering that decisions taken in the past could have gone further, in a recurring criticism of the intervention of his future predecessor.
“BdP and the other financial regulators cannot show, in the future, the same degree of relationship, or lack of it, that they showed in the past. The institutional framework is less limited than the practice that ended up happening, ”said Mário Centeno, stressing that“ the models of supervision depend on the rules that are defined and who occupies the positions ”.
“It is extremely important that the relationship between supervisors changes,” he said. Centeno also defended the importance of the role of audits, considering that the role of these audits in this context cannot be "reduced, nor removed", adding that "the reinforcement of the BdP's supervisory role is continuous and must be maintained. There must be very active supervision at this stage, in particular, when we have all the post-pandemic problems with us ”.
He also defended that the objectives of financial stabilization that guide both the regulator and the holder of Finance are the same, so there is no antagonism of any kind. “We had processes of consolidation and stabilization in the financial sector that allowed Portugal to have a very positive cycle of convergence with the European Union. This process cannot be maintained if the stability of the financial system is called into question. This is the main concern of the BdP governor and this is the main concern of the Portuguese Minister of Finance. There is no conflict in this dimension, between public interest and public interest. What is present in all of them is the national interest ”, he said.
Parties against the nomination, but IL goes further and announces precautionary measure
PSD, Bloco de Esquerda, CDS-PP, PCP and Chega categorically stated that they disagreed with the appointment of Mário Centeno to succeed Carlos Costa, who formally ends his term at the head of the regulator this Wednesday, although he remains in office until at the entrance of his successor.
However, the Liberal Initiative goes further in the opposition manifestation and deputy João Cotrim Figueiredo announced that he will interpose an individual precautionary measure to prevent the nomination until the bill presented by the PAN that establishes, in addition to changes to the nomination of members of the board of directors of BdP, a period of disgust in the transition from positions of government to the regulator.
"With full respect for the separation of powers in a rule of law and given the dissatisfaction that IL has with the legislative process so that this appointment does not occur before the legislative process is completed," said João Cotrim Figueiredo, clarifying, in the face of the protests of the deputies present, who will do it “as a citizen, in defense of the people who elected us”.
The precautionary measure will have to be analyzed and decided in court, but Mário Centeno did not respond to the intention expressed by the deputy. Rather, it was limited to reinforcing that he feels “qualified, motivated and supported in these functions”.
The opinion of the hearing of Mário Centeno will be prepared by the socialist deputy João Paulo Correia and subsequently voted by the parties, although it is not binding. The appointment will be formalized upon a proposal by the Council of Ministers.