relatorio 2013_2_13.indd - Fundo de Garantia de Depósitos

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A NNUA L REPORT A N D
A CCO UN TS
2011
Lisbon, 2012
Edition
Fundo de Garantia de Depósitos
Avenida da República, 57 - 8.º
1050-189 Lisboa
www.fgd.pt
Design, Printing and Distributing
Banco de Portugal
Administrative Services Department
Documentation, Editing and Museum Division
Editing and Publishing Unit
Lisbon, 2012
Number of copies
50 exemplares
ISSN 1647-144X (print)
ISSN 2182-4126 (on-line)
Legal Deposit no 286945/08
CONTENTS
ANNUAL REPORT AND ACCOUNTS 2011
7
Annual report and accounts 2011
9
Management Committee
11
Board of auditors of Banco de Portugal
I. REPORT ON THE FUND’S ACTIVITIES
15
17
1. Summary of the activities of the Deposit Guarantee Fund
Box 1 | Strengthening of the deposit guarantee scheme
21
2. Member credit institutions
22
3. Eligible deposits
23
4. Financial resources of the Fund
25
5. Contributions of member credit institutions to the Fund
28
31
Box 2 | Irrevocable payment commitments
6. Financial management of the Fund
31
6.1. Macroeconomic environment and financial markets developments
33
6.2. Portfolio structure and risk control
35
6.3. Profit and loss
36
7. Regulatory and legislative changes
36
8. Auditing of the Fund
37
9. Support by Banco de Portugal and cooperation of member institutions
II. FINANCIAL STATEMENTS AND NOTES ON THE FINANCIAL
STATEMENTS
40
10. Financial Statements
44
11. Notes on the Financial Statements
54
12. Proposal for the Distribution of Results
III. OPINION OF THE BOARD OF AUDITORS OF BANCO DE PORTUGAL
57
Opinion
IV. EXTERNAL AUDITOR’S REPORT
60
Opinion
V. ANNEX
65
List of credit institutions that were members of the Fund on 31 December 2011
ANNUAL REPORT
AND ACCOUNTS 2011
ANNUAL REPORT AND ACCOUNTS 2011
1.
In accordance with the provisions laid down in Article 172 of the Legal
Framework of Credit Institutions and Financial Companies (RGICSF), approved
by Decree-Law No 298/92 of 31 December, and in fulfilment of its duties
the Management Committee has submitted, within the legal deadline of
31 March 2012, to the Minister of State and for Finance, for approval, the
Annual Report and Accounts of the Deposit Guarantee Fund for 2011,
together with the Opinion of the Board of Auditors of Banco de Portugal.
2.
Annual Report and Accounts of the Deposit Guarantee Fund have been
approved by Decision No 1217/12-SETF of the Secretary of State for the
Treasury and Finance of 26 July 2012.
7
MANAGEMENT COMMITTEE
In compliance with the provisions laid down in Article 158 of the Legal
Framework of Credit Institutions and Financial Companies (RGICSF), the
Management Committee is composed as follows:
CHAIRMAN
Pedro Miguel de Seabra Duarte Neves1
MEMBERS
João Maurício Fernandes Salgueiro2
Carlos Manuel Durães da Conceição3
SECRETARY GENERAL
João Filipe Soares da Silva Freitas4
1 Appointed by the Board of Directors of Banco de Portugal.
2 Appointed by Associação Portuguesa de Bancos (Portuguese Banking Association).
3 Appointed by the Secretary of State for the Treasury and Finance, in the exercise of duly
delegated powers.
4 Appointed by the Fund’s Management Committee, in office since 21 October 2010.
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BOARD OF AUDITORS OF
B A NC O DE P ORT U G A L
In accordance with the provisions laid down in Article 171 of the Legal
Framework of Credit Institutions and Financial Companies (RGICSF), the
Board of Auditors of Banco de Portugal shall monitor the Fund’s activities
and the observance of the applicable laws and regulations and shall issue
its opinion on the annual accounts.
CHAIRMAN
Emílio Rui da Veiga Peixoto Vilar5
MEMBERS
Rui José da Conceição Nunes6
Amável Alberto Freixo Calhau7
5 Appointed member of the Board of Auditors, performing the duties of Chairman, by Decision No
97/96-XIII of the Minister for Finance of 6 March. His term of office was renewed by Decision
No 22729/2007 of the Minister for Finance, published in Official Gazette No 189 (Series II) of
1 October 2007.
6 Appointed member of the Board of Auditors by Decision No 7/93-XII of the Minister for Finance
of 26 February. His term of office was renewed by Decision No 22640/2007 of the Minister for
Finance, published in Official Gazette No 188 (Series II) of 28 September 2007.
7 Appointed member of the Board of Auditors, performing the duties of statutory auditor, by
Decision No 12230/2006 (Series II) of the Minister for Finance of 11 May, published in Official
Gazette No 113 (Series II) of 12 June 2006. His term of office was renewed by Decision No
15410/2009 of the Minister for Finance, published in Official Gazette No 130 (Series II) of 8
July 2009.
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REPORT ON THE FUND’S ACTIVITIES
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1. SUMMARY OF THE ACTIVITIES
OF THE DEPOSIT GUARANTEE FUND
2011 was marked by the Portuguese request for financial assistance from the European Union (EU) and
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scheme. Indeed, under the EU/IMF Economic and Financial Assistance Programme, Portugal committed
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itself to strengthening the legislation on the Deposit Guarantee Fund and the Mutual Agricultural Credit
Report of the Fund’s activities
the International Monetary Fund (IMF) in April, which also had implications for the deposit guarantee
Guarantee Fund. This culminated in the publication of Decree-Law No 31-A/2012 of 10 February, already
in early 2012, following preparatory work in the course of 2011, in which the Deposit Guarantee Fund
participated. Given the importance of changes introduced into Portuguese legislation on the deposit
guarantee scheme, Box 1 provides detailed information on this matter.
Still in the context of legislative changes in 2011, mention should also be made of the decree-law
published at the end of the year that permanently sets at €100,000 the coverage limit for the repayment
of deposits placed with credit institutions that are members of the Deposit Guarantee Fund.
Throughout 2011, as in previous years, the Fundo de Garantia de Depósitos – FGD (Deposit Guarantee
Fund, hereinafter referred to as ‘the Fund’) carried on the regular activities inherent to a deposit guarantee
fund with an ex ante contributory scheme, the most relevant of which are listed below:
• Calculation of the annual contribution for 2011 of each member institution, based on the end-of-month credit balances of eligible deposits reported in 2010;
• Collection of annual contributions at the end of April and conclusion of contracts with member
institutions relating to the assumption of irrevocable and collateralised payment commitments, as
regards the share of contributions not paid in cash;
• Management of the Fund’s financial means, in compliance with the criteria established by the Management Committee for financial investments, and according to the guidelines and management rules
established in the investment plan agreed between the Fund and Banco de Portugal, pursuant to
the provisions laid down in Article 163 of the Legal Framework of Credit Institutions and Financial
Companies, hereinafter referred to as the ‘RGICSF’.
In cooperation with Banco de Portugal, the Fund also participated at EU level in the review of the
Directive on deposit guarantee schemes, namely by providing technical support to the Portuguese
Permanent Representation to the European Union. In this respect, a proposal was made to introduce
in the Directive the concept of irrevocable payment commitments (Box 2 presents further details on
irrevocable payment commitments).
The Fund also continued to cooperate with other deposit guarantee schemes, in particular with those
of other EU Member States, namely within the framework of the European Forum of Deposit Insurers
(EFDI), of which the Fund is a founder member.
The repayment of deposits with Banco Privado Português, S.A. (hereinafter referred to as ‘BPP’) – currently
in the process of winding-up – continued in 2011. The guarantee provided by the Fund was triggered
in April 2010, following the decision by Banco de Portugal to withdraw the authorisation given to
BPP to pursue its business. Still in 2010, the Fund made repayments totalling €89.2 million. However,
despite complying with the legal repayment deadlines by which it is bound,1 the Fund did not conclude
all repayments in 2010, mainly because there were certain depositors of which the Fund did not have
1 In accordance with Article 167 of the RGICSF, repayment by the Fund shall take place within a maximum period of seven days, in
the case of a first share of up to €10,000 of all deposits covered, while the remainder up to the limit of the guarantee shall be repaid
within a maximum period of twenty working days. However, the Fund may suspend repayments, where there are reasonable doubts
as to whether any repayment is due.
information on their bank account number for the transfer of funds, and because there were reasonable
doubts as to whether depositors in the following situations had legal right to repayment:
• Depositors whose situation raised reasonable doubts as to whether any of the reasons for exclusion
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from the guarantee provided for in Article 165 of the RGICSF applied;
FUNDO DE GARANTIA DE DEPÓSITOS | ANNUAL REPORT AND ACCOUNTS 2011
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• Amounts over which there were reasonable doubts as to whether they fell within the Fund’s scope
of coverage;
• Deposits whose holders had debts fallen due and claimable by BPP and which had (or not) been
pledged as collateral, to the amount covered by the pledge or, if no pledge applied, to the amount
corresponding to the respective debts fallen due and claimable;
• Holders of accounts with BPP opened after the date on which the bank made public its inability to
meet payment obligations and on which Banco de Portugal adopted extraordinary reorganisation
measures, and particularly after the date on which BPP declared the suspension of payments;
• Deposits to which new co-holders were added after the date on which BPP made public its inability
to meet payment obligations and on which Banco de Portugal adopted extraordinary reorganisation
measures.
In 2011 the Fund continued the individual analysis of depositors in the above situations and adopted
decisions regarding most of them.
As regards actual repayments, the Fund repaid deposits to the total amount of €8.2 million in 2011,
which added to the €89.2 million paid in 2010. Therefore, on 31 December 2011, the Fund had repaid
deposits with BPP to the total amount of €97.4 million.
Taking into account (i) the cases of depositors who, on that date, had not been repaid for the sole reason
that the Fund had not yet been informed of their bank account number in order to transfer the funds,
and (ii) a small number of cases where transfers ordered by the Fund could not be made for operational
reasons beyond the Fund’s control, the total amount of deposits covered by the Fund’s guarantee held by
depositors whose right to repayment was actually recognised reached €98.1 million at the end of the year.
There are other cases where deposits will be repaid at a later stage, although as at 31 December 2011
the Fund had not been able to determine the rightful payee. This is the case of deposits pledged with
BPP or deposits whose holders have debts fallen due and claimable by BPP, even if not associated with
a pledge. In this context, the Fund made provisions for deposits covered by the guarantee to a total
amount of €5.2 million at the end of the year and, as such, at the end of the 2011 fiscal year, the overall
cost of the repayment of deposits with BPP was estimated to reach €103.3 million.
As described in greater detail in Chapter 4, the Fund’s own resources totalled €1,397 million at the end
of 2011, of which €444.4 million corresponded to irrevocable payment commitments contractually
undertaken by member credit institutions and mainly collateralised by government debt securities. In
2011 a trend towards a gradual strengthening of the Fund’s financial means was resumed, following
deterioration in 2010, due to the repayment of deposits with BPP. Indeed, own resources increased
by 3.2% from the previous year, due to the collection of annual contributions (€39.4 million) and the
incorporation of profit made in 2011 (€10.7 million), which more than offset repayments of deposits
in the course of the year. In 2012 the Fund’s own resources are expected to exceed those at the end of
2009, before the reimbursement of depositors of BPP.
.
BOX 1 | STRENGTHENING OF THE DEPOSIT GUARANTEE SCHEME
changes made to the RGICSF this permanently set at €100,000 the coverage limit for the repayment of
deposits placed with member credit institutions of the Deposit Guarantee Fund.
The €100,000 limit had been temporarily established by Decree-Law No 211-A/2008 of 3 November,
following a European-wide commitment to temporarily strengthen deposit-guarantee arrangements,
given the international situation of financial markets. In this respect, this decree-law anticipated in 2008
the initiative to harmonise at EU level the coverage limit for deposit guarantee schemes, which culminated in Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009. This
Directive set at €100,000 the coverage limit for deposits in EU Member States, as of 31 December 2010.
Given that, in accordance with Decree-Law No 211-A/2008 of 3 November, the €100,000 coverage
limit would cease to apply on 31 December 2011, it was necessary to make legislative changes in order
to set that limit on a permanent basis. This was done with the publication of Decree-Law No 119/2011
of 26 December.
Although this represents a very significant strengthening of the deposit guarantee scheme, setting the
coverage limit at €100,000 on a permanent basis was mostly intended to formally ensure compliance
with EU rules, which were already in force in Portugal.
The initiatives that effectively reinforced deposit guarantee in Portugal – to which the country committed
itself under the EU/IMF Economic and Financial Assistance Programme – culminated, in early 2012, in
the publication of Decree-Law No 31-A/2012 of 10 February.
This decree-law introduced profound changes into the RGICSF, mainly as regards the powers of Banco
de Portugal to intervene in distressed financial institutions, in addition to revising a number of aspects
of the legal framework applicable to the Deposit Guarantee Fund. This revision, in effect, translated
into a very significant increase in the effectiveness of the guarantee on deposits. (Note: changes were
also introduced into the legal framework applicable to the Mutual Agricultural Credit Guarantee Fund,
which are broadly similar to those introduced in the Deposit Guarantee Fund.)
Setting the limits to the purpose of the Deposit Guarantee Fund
First, the deposit guarantee scheme was strengthened by limiting the purpose of the Fund, which now
precludes the use of the Fund’s resources for any purpose other than safeguarding deposits.
Indeed, under the scheme that was in force prior to recent changes, in addition to guaranteeing the
repayment of deposits up to an amount of €100,000, the Fund could also cooperate, on a temporary
basis, in initiatives intended to restore the liquidity and solvency conditions of its member credit institutions, within the framework of the recovery and reorganisation plans undertaken by Banco de Portugal.
In addition, the Fund could provide financial support to Sistema de Indemnização aos Investidores
(Investor Compensation Scheme) in the form of loans or guarantees, namely in cases where this scheme
is triggered by member credit institutions of the Fund.
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At the end of 2011 publication of Decree-Law No 119/2011 of 26 December took place. Pursuant to the
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teeing deposits, including, in addition to the actual repayment of deposits: (i) the possibility of providing
18
deposits with member credit institutions of that Fund; and also (ii) the possibility of providing financial
Under the current framework, the Fund may only be used in situations directly aimed at the guaran-
support for the transfer of deposits with a distressed institution to another authorised deposit-taking
financial assistance to the Mutual Agricultural Credit Guarantee Fund, solely for the purpose of repaying
credit institution or an institution specifically set up for this purpose by Banco de Portugal, a so-called
bridge bank, provided that costs associated with such financing do not exceed those associated with
direct repayments to depositors.
The possibility of providing financial assistance to the Mutual Agricultural Credit Guarantee Fund, which
is reciprocal, is aimed at establishing a solidarity regime between the two existing deposit guarantee
schemes in Portugal, which jointly guarantee deposits placed with all credit institutions having their head
office in the country that are authorised to take deposits, as well as with branches of credit institutions
having their head office in non-EU countries.
The possibility of providing financial support for the transfer of deposits makes it possible – in cases where
an institution is in financial distress and at serious risk of not meeting its licensing requirements – for
Banco de Portugal to pursue a more favourable alternative for depositors, which can also mean lower
costs for the Fund. This alternative involves selling deposits covered by the Fund to another (sound) credit
institution or to a (sound) bridge bank without imposing any loss to the amount of deposits covered by
the Fund, while also ensuring that deposits are continually available.
The transfer of deposits covered by the Fund, up to the coverage limit, may be accompanied by a
transfer of assets, of an amount and type to be established, depending on the particular circumstances
of each case. If such assets are not sufficient to cover the amount of transferred deposits, the Fund may
then make up for that shortfall. It should be noted that if deposits effectively become unavailable in a
distressed bank and, consequently, the Fund is called on, the amount provided for the repayment of
deposits will inevitably correspond to the full nominal value of covered deposits, up to the coverage limit.
Clearly, from the Fund’s perspective, costs associated with the transfer of deposits will therefore depend
on the value of potential assets to be sold to the deposit-taking bank. However, under no circumstances
can this cost exceed the amount that the Fund would have to pay if it were to repay deposits directly.
Therefore, the main change introduced in the new legal framework is the impossibility of using the Fund’s
resources for purposes other than the guarantee of deposits. Not only does it remove the possibility of the
Fund participating in the recovery of member credit institutions but it also revokes the possibility of it being
called on to address any investor-related events, through loans to the Investor Compensation Scheme.
Reinforcement of backstop funding facilities
Under the legal framework previously in force, the Fund could obtain loans and, in particular, provided
that certain conditions were met, the Fund could also obtain financial assistance, on a temporary basis,
from Banco de Portugal.
However, should deposits to be repaid by the Fund exceed its available financial means, the Fund’s balance
sheet would be exhausted and the Fund would be deprived of any other assets that could be converted
into liquidity. In that scenario, the Fund’s liabilities (i.e. deposits to be repaid) would be higher than its
total assets. The recourse to special contributions from member institutions, which had already been
prove to be insufficient to comply with the Fund’s obligations – as they are limited by law – there would
be no real funding alternatives.
Indeed, although the possibility of borrowing had already been envisaged in the past, it was all but
unviable, as in the circumstances described above the Fund would be in a clear financial imbalance and
would inevitably face funding difficulties. Recourse to Banco de Portugal, which had also been envisaged
in the previous legal framework, could be the Fund’s only alternative to obtain funds. However, even that
would require – and still requires – that certain assumptions be met, namely that if Banco de Portugal
were to provide any assistance, it would have to comply with the conditions set out in its Organic Law
and with the provisions relating to the prohibition of monetary financing laid down in the Treaty on
the Functioning of the European Union. This means that, among other conditions, any loan by Banco
de Portugal would have to be (and must still be) granted against collateral. However, in the scenario in
question – where the Fund’s liabilities would exceed its own resources and, therefore, the Fund’s balance
sheet would be exhausted – the possibility to ask for the assistance of Banco de Portugal would be,
under the previous framework, highly unlikely.
In addition to clarifying and systematising the list of financial resources available to the Fund, the new
framework set up mechanisms that facilitate funding in extreme situations – where existing resources
prove to be insufficient for the repayment of deposits – and established alternative ways of funding.
Indeed, the new framework clearly differentiates between “primary” financial means of the Fund, which
include initial contributions and annual contributions from member credit institutions, and financial
means which the Fund may access when primary resources prove insufficient (the so-called “additional
resources”).
“Additional resources” continue to include the possibility of obtaining loans. However, the Fund may
now turn to mechanisms that facilitate access to this type of financing, namely the use of securities in
rem and personal guarantees by member credit institutions, which shall be given following an executive
order by the Government. Moreover, the Fund is now allowed to apply for loans from other deposit
guarantee schemes officially recognised in EU Member States. This funding modality may be more feasible,
as the potential financial imbalance that would emerge for the Fund could be less of an impediment in
case of financial assistance provided by kindred entities. In fact, the possibility of reciprocal loans at EU
level between deposit guarantee schemes is being discussed in preparation of the future EU Directive
on deposit guarantee schemes.
Finally, in addition to the possibility of obtaining loans from Banco de Portugal – whose access conditions
are now more explicitly stated and more feasible, given that the Fund will be able to obtain collateral
from member credit institutions –the possibility of obtaining State loans or guarantees has also been
enshrined in the law.
The additional funding mechanisms available to the Fund continue to comply with one fundamental
principle: member institutions are responsible for the financing of the Fund and only by collecting contributions from such institutions shall the Fund be able to tap the resources it needs to ensure a potential
emergency funding, regardless of its modality.
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envisaged in the previous framework, could reduce the funding deficit, but should these contributions
Creation of a preferential ranking of claims in respect of deposits covered by the Deposit
Guarantee Fund and claims held by the Fund
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The new framework also establishes a preferential ranking of claims in respect of deposits covered by the
Fund as well as of claims held by the Fund itself following the repayment of deposits (and the ensuing
subrogation of depositors’ rights) or the funding of transfers of deposits. Such claims now rank above all
other competing rights to assets of deposit-taking credit institutions in liquidation proceedings, except
for those related to legal costs, claims held by the institution’s employees arising from labour contracts
and tax claims of the State, local authorities and social security entities.
In practice, this change increases the probability of recovering the amounts paid by the Fund in repayment
procedures or in the transfer of deposits, thereby significantly reducing the financial impact on the Fund
in the event of actual or imminent unavailability of deposits. This is a more efficient way of ensuring that
the Fund’s resources are preserved, even when the Fund is called upon.
Moreover, establishing a preferential ranking of claims may produce wider effects on the Fund’s financial
position.
On the one hand, they help to maximise the amount of assets of a distressed institution that may be
transferred in order to fund the sale of deposits. In fact, should this preferential ranking not exist, it
would be difficult to attach an adequate amount of assets to deposits to be sold to a sound institution,
as this could give rise to unequal treatment of creditors in a potential pre-bankruptcy phase. Therefore,
the preferential ranking of claims means that the borrowing needs associated with a transfer of deposits
will be lower.
On the other hand, as noted above, the preferential ranking of claims significantly increases expectations
that funds will be recovered should the Fund be called upon. Such expectations are particularly important when the Fund needs to tap “additional” financial resources, given that it strengthens the Fund’s
credibility as a borrower, thereby making borrowing easier.
2. MEMBER CREDIT INSTITUTIONS
Credit institutions based in non-EU countries shall also be members of the Fund, with respect to deposits
placed with their branches in Portugal, except if those deposits are covered by a guarantee scheme of
the home country under conditions that Banco de Portugal deems equivalent to those established by
the Deposit Guarantee Fund.
At the end of 2011, 47 credit institutions were members of the Fund, including 37 banks, 5 savings banks
and 5 mutual agricultural credit banks not belonging to the Integrated Mutual Agricultural Credit Scheme.
In the course of the year two credit institutions ceased to be members of the Fund, more specifically:
(i) the branch of AS Privat Bank in Portugal, which was a member of the Fund in order to benefit from
the so-called ‘topping-up scheme’; this is no longer justified given that an amendment was introduced
in Latvian law, which set at €100,000 the limit for deposits covered by its guarantee scheme; and (ii)
Deutsche Bank (Portugal), S. A., due to the cancellation of its registration with Banco de Portugal following
a cross-border merger with Deutsche Bank Europe GmbH as part of its transformation into a branch of
Deutsche Bank AG. Deposits placed with both institutions ceased to be covered by the Fund, as they
were transferred to depositor protection schemes based in their home countries, i.e. Latvia and Germany.
Table I
MEMBER CREDIT INSTITUTIONS OF THE DEPOSIT GUARANTEE FUND
Member credit institutions
As at
31 Dec 2010
Changes in 2011
As at
31 Dec 2011
New members
Outgoings
39
-
2
37
Savings banks
5
-
-
5
Mutual agricultural credit banks
5
-
-
5
49
-
2
47
Banks
Total
Source: Deposit Guarantee Fund
In compliance with Article 22 (c) of the Fund’s Regulations, approved by Executive Order No 285-B/95 of
19 September, the list of member credit institutions was published in the daily press (in two of the most
widely read newspapers and in one newspaper specialising in economic and financial information) on
3 October 2011. This information is regularly updated and published on the Fund’s website, at www.fgd.pt.
The Fund also published a summary of its activities as well as the Accounts for 2010 in the press, in
order to provide the general public with information about the Fund’s activities and financial situation.
This information is included in the 2010 Annual Report and Accounts, which is also published on the
Fund’s website.
A list of the 47 member credit institutions on 31 December 2011 is included in an annex to this Annual
Report and Accounts.
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Credit institutions having their head office in Portugal authorised to take deposits shall compulsorily be
members of the Fund in compliance with Article 156 of the RGICSF, the only exceptions being mutual
agricultural credit banks belonging to the Integrated Mutual Agricultural Credit Scheme, which are subject
to a specific deposit guarantee scheme (Mutual Agricultural Credit Guarantee Fund).
3. ELIGIBLE DEPOSITS2
As at 31 December 2011, the total number of depositors covered by the Fund’s guarantee totalled
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around 16.4 million3 and the total amount of deposits covered by the Fund’s guarantee – i.e. deposits
of eligible holders, considered only up to €100,000 – reached approximately €111,570 million (Table II).
Table II
ELIGIBLE DEPOSITS, COVERED DEPOSITS AND COVERAGE RATIO
Coverage of eligible deposits
Deposits
(EUR millions)
Eligible deposits
158,154
Amounts covered
111,570
# Number of eligible
depositors
16,439.705
Coverage ratio
71%
Source: Deposit Guarantee Fund.
The coverage ratio of eligible depositors (i.e. the ratio of the value of deposits up to the coverage limit
to their total value) stood at 71%, which means that the share of deposits that are not covered given
that they exceed the coverage limit – albeit held by eligible depositors – stood at 29%.
Table III
BREAKDOWN OF DEPOSITS BY RANGES OF AMOUNTS DEPOSITED
Ranges according to the balance by depositor (D)
% depositors
% deposits
83.2%
14.5%
10,000 < D =< 25,000
9.6%
15.6%
25,000 < D =< 50,000
4.1%
14.6%
50,000 < D =< 100,000
1.9%
13.7%
D > 100,000
1.2%
41.5%
D =< 10,000
However, in terms of the number of depositors, eligible holders whose deposit is not fully covered only
account for around 1% of total depositors. Chart 1 (orange series) and Table III illustrate that, although
deposits of holders of balances that exceed the coverage limit account for 41.5% of the total amount of
eligible deposits, they correspond to only 1% in terms of the number of depositors. In turn, depositors
with balances below €10,000 per institution represent around 83% of the total number of depositors,
but hold only 14.5% of deposits (Chart 1, brown series).
2 The analysis presented in this chapter does not include deposits that are excluded from the Fund’s guarantee in accordance with
Article 165 (1) of the RGICSF. The group of deposits excluded from the guarantee includes, most notably, deposits held by credit
institutions, financial companies, insurance companies and public sector, as well as deposits made outside the territorial scope of
the guarantee and deposits held by companies that are controlled or in a group relationship with the credit institution.
3 Naturally, this figure does not correspond to 16.4 million different holders, given that one holder may hold deposits in different institutions.
Chart 1
BREAKDOWN OF DEPOSITS BY RANGES OF AMOUNTS DEPOSITED
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Value of eligible deposits
23
42%
10%
4%
2%
1%
14%
15%
83%
15%
16%
D =< 10,000
10,000 < D = 25,000
25,000 < D = 50,000
50,000 < D = 100,000
D > 100,000
4. FINANCIAL RESOURCES OF THE FUND
As at 31 December 2011, the Fund’s own resources4 totalled €1,397.0 million, i.e. €43.0 million (3.2%)
more than at the end of 2010, as shown in Table IV. The trend towards a gradual strengthening of the
Fund’s financial means was thus resumed, following a deterioration in 2010, which was due to the
repayment of deposits with BPP.
Changes in 2011 result from the collection of annual contributions (€39.4 million) and the incorporation
of profit generated in that fiscal year (€10.7 million), which more than offset the repayment of deposits
in 2011.
As usual, contributions to profit/loss for the year are mainly the result of interest from investments made
by the Fund and gains from the sale and valuation of securities. Net profit for 2011 increased by 180%
from the previous year. In 2010, net income from the Fund’s securities portfolio was 0.4%, increasing to
1.1% in 2011. This can be explained by an upward shift in interest rate curves on sovereign debt issued
by several countries, which benefited the Fund’s portfolio due to the diversification of investment across
countries with varying credit quality.
4 “Own resources” comprise the initial contributions of Banco de Portugal, the initial and periodical contributions of member credit
institutions and income from the investment of the Fund’s resources
Number of eligible depositors
Table IV
DEVELOPMENTS IN OWN RESOURCES AND PROFIT AND LOSS
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Nature of the resources
EUR thousands
Balance as at
31 Dec 2010
Balance as at
31 Dec 2011
Changes in
balances
24
Contributions paid to the fund
Single initial contribution paid by Banco de Portugal
97,824
97,824
-
Initial contributions paid by member credit
institutions
98,500
98,500
-
1,005,263
1,044,627
39,364
1,201,587
1,240,951
39,364
- 96,274
- 103,347
- 7,073
244,935
248,743
3,808
-
-
-
3,809
10,663
6,854
1,354,056
1,397,010
42,954
Periodical (annual) contributions*
Sum of contributions
Triggering of the deposit guarantee
Reserves
**
Profit/Loss
Profit/loss brought forward
Net profit/loss for the year
Total own resources and profit/loss
* Includes contributions paid in cash and the share corresponding to irrevocable payment commitments undertaken by member credit institutions.
** Reserves are formed by the accumulation of annual profit obtained by the Fund.
The ratio of the Fund’s own resources to covered deposits5 was 1.3 % at the end of 2011.
Taking into account the total amount of eligible deposits,6 the Fund’s capital coverage ratio was 0.9%
as at 31 December 2011, unchanged from the end of 2010. The maintenance of this ratio reflects an
increase in own resources in the same proportion as the increase in the value of eligible deposits.
Table V
COVERAGE LEVEL OF DEPOSITS
EUR thousands
As at 31 Dec 2010
As at 31 Dec 2011
Fund’s own resources
Including irrevocable payment commitments (A)
1,354,056
1,397,010
Excluding irrevocable payment commitments (B)
912 ,662
952,576
154,130,704
158,154,036
N.A.
111,569,082
Eligible deposits (C)
Covered deposits up to the coverage level (D)
Ratio (A) / (C)
0.9%
0.9%
Ratio (A) / (D)
N.A.
1.3%
5 That is, considering the amount repayable in the event of deposits being unavailable, which corresponds to eligible deposits accounted up to the the coverage level of €100,000.
6 Eligible deposits correspond to deposits that form the incidence basis of the annual contribution to the Fund, before the €100,000
coverage level is applied, in the event of deposits being unavailable.
5. CONTRIBUTIONS OF MEMBER CREDIT INSTITUTIONS
TO THE FUND
of eligible deposits weighted by a factor determined by the capital adequacy ratio of each member
institution. In the same period, the reduced rate of 0.01% applicable to deposits placed at offshore
branches in the free trade zones of Madeira and Santa Maria Island remained unchanged, and the
minimum contribution was set at €17,500.7
Table VI shows that, in 2011, total contributions from member credit institutions amounted to €39.4
million, of which 91% corresponded to payments in cash and the remainder to the assumption of irrevocable payment commitments.
During the year under review, irrevocable payment commitments amounted to €3.7 million, accounting
for approximately 9% of total contributions, which is close to the legally defined maximum percentage
for 2011 (10%)
Table VI
CONTRIBUTIONS IN 2011
EUR thousands
MEANS OF PAYMENT AND IRREVOCABLE PAYMENT COMMITMENTS
Contributions to the Fund in 2011
Cash
Irrevocable payment commitments
Total
35,703
3,662
39,365
Table VII presents the breakdown of total contributions in 2011 by type of member credit institution,
with contributions paid by banks representing 94.0% of total contributions. Savings banks and mutual
agricultural credit banks accounted for 5.4% and 0.6% respectively.
Table VII
CONTRIBUTIONS IN 2011 BY TYPE OF CREDIT INSTITUTION
EUR thousands
Contributions in 2011
Banks
Savings banks
Mutual agricultural credit banks *
Total
37,007
2,140
217
39,365
* Not belonging to the Integrated Mutual Agricultural Credit Scheme (SICAM). The guarantee of deposits taken by mutual agricultural credit banks belonging to SICAM
is governed by Decree-Law No 345/98 of 9 November 1998 and falls within the scope of the Mutual Agricultural Credit Guarantee Fund.
7 See Instructions of Banco de Portugal No 22/2010 and No 6/2011. The special contribution applicable to deposits placed at offshore
branches in the free trade zones of Madeira and Santa Maria Island was terminated in 2011, but this change will only be taken into
account when calculating contributions for 2012.
I
25
In the calculation of periodical contributions for 2011, a base rate of 0.03% was applied to the amount
Turning to the breakdown of weightings used in the calculation of contributions, 16 credit institutions
benefited from the effect of capital adequacy ratio weightings (weightings of 80% and 90%, for ratios
of 12% or more). In these cases, adjusted rates8 stood at 0.024% and 0.027%. In turn, for 6 credit
I
26
institutions weightings resulted in adjusted rates of 0.033% and 0.036% – i.e. higher than the 0.03%
base rate (weightings of 110% and 120%). The minimum contribution, set at €17,500, was applied to
19 credit institutions.
Table VIII
BREAKDOWN OF WEIGHTINGS USED IN THE CALCULATION9
EUR thousands
Number of member credit institutions
Weightings of the base contribution
rate and minimum contribution
Banks
Savings banks
Mutual
agricultural
credit banks
Total
1.2 weighting
1
-
-
1
1.1 weighting
5
-
-
5
1 weighting
6
1
-
7
0.9 weighting
2
1
-
3
0.8 weighting
7
3
3
13
17
-
2
19
38
5
5
48
Minimum contribution
Contributions calculated at the reduced rate of 0.01%, applicable to deposits placed at offshore branches
in the free trade zones of Madeira and Santa Maria Island, continued to have a negligible share of total
annual contributions, as shown in Table IX.9
Table IX
ANNUAL CONTRIBUTIONS TO THE FUND BY TYPE OF CONTRIBUTION RATE
EUR thousands
Annual contributions
Contribution rates
Base rate
Reduced rate
Totais
2010
2011
38,300
38,782
710
583
39,010
39,365
35,228
35,704
3,782
3,662
Of which:
• Paid in cash
• Irrevocable payment commitments
Source: Deposit Guarantee Fund
8 The “adjusted base rate” is obtained by applying a multiplying factor to the base contribution rate according to the position of the
average capital adequacy ratio of each member institution, on an individual basis, in the five categories listed in the table in paragraph
5 of Notice of Banco de Portugal No 11/94
9 Deutsche Bank (Portugal), S. A. was still a member of the Fund on the date the annual contribution for 2011 was due.
In the evaluation of the financial effort in cash, required every year from member credit institutions,
account is taken of the effect of the solvency weighting of each institution and the maximum authorised
level of utilisation of irrevocable payment commitments, as shown below.
I
Table X
Maximum
level of
irrevocable
payment commitments
Paid in cash
Base rate
Effective
contribution
rate in cash
ASR
brackets(*)
Weighting
multiplying
factor
Weighted rate
(1)
(2)
(3)
(4)=(2)x(3)
(solvabilidade)
(5)
(6) = (4)x(5)
10%
90%
0.03%
0.027%
<8
1.2
0.0324%
[ 8 ; 10 [
1.1
0.0297%
[ 10 ; 12 [
1.0
0.027%
[ 12 ; 14 [
0.9
0.0243%
≥ 14
0.8
0.0216%
(*) ASR (average solvency ratio): average of solvency ratios, calculated on an individual basis, as at 30 June and 31 December of the previous year.
As in previous years, the effective contribution rate in cash ranged between 0.0216% and 0.0324% of
total eligible deposits.
27
EFFECTIVE CONTRIBUTION IN 2011: IN CASH AND WEIGHTED
BOX 2 | IRREVOCABLE PAYMENT COMMITMENTS
I
28
Pursuant to Article 161 (4) of the RGICSF, member credit institutions may be exempt from paying their
annual contribution within the legally established time limit, provided they take a commitment, irrevocable and collateralised , to paying the Fund, at any time as required by the latter the amount of the
contribution that was not paid in cash, in full or in part.
In practice, irrevocable payment commitments are an obligation on the part of credit institutions to pay
their contributions in the future. This obligation is duly formalised in a contract signed each year between
the Fund and any institution that chooses this obligation instead of paying a contribution in cash.
This is a perpetual and irrevocable obligation, given that it will not cease to apply nor will it decrease
under any circumstance, save when such obligation to the Fund is eventually fulfilled. As such, these
commitments constitute an asset of the Deposit Guarantee Fund, which, by virtue of its characteristics
– namely the fact that it may be called on demand and that it is collateralised under the conditions
described below – carries very low devaluation risks and is highly liquid.
DIAGRAM ILLUSTRATING HOW IRREVOCABLE PAYMENT COMMITMENTS (IPCS) ARE UNDERTAKEN
Annual contribution
Cash
FGD
Member
FGD
IPC
Central securities
depository
Pledged secutiries
in favour of FGD
(= IPC/90%)
Indeed, the contractual terms of irrevocable payment commitments provide security to the Deposit
Guarantee Fund as to the safeguard of the amount owed by institutions and make it possible to convert
these assets into liquidity in a very short period of time.
First, the Fund reserves the right to decide on the immediate payment of the commitment, at any
given moment, without any conditions attached or any need to respect a fixed period of notice. Upon
being notified that they must pay the contribution due, institutions have up to three days to settle that
commitment.
Moreover, the Fund’s right is guaranteed by a formal pledge on securities. Therefore, if the credit institution fails to settle the payment commitment, the Fund can take ownership of the pledged securities.
Such securities are deposited in a central securities depository, where the pledge is registered in favour
I
The quality of pledged securities is governed by Notice of Banco de Portugal No 11/94, which establishes
29
that only securities tradable in active secondary markets are eligible, provided they have adequate liquidity
of the Fund and, accordingly, any operation involving them is subject to the Fund’s prior approval.
and are issued or guaranteed by low credit risk entities, namely central government, central banks and
supranational entities deemed to have a minimum risk for capital requirements purposes.
The coverage of payment commitments by securities must be permanent. In fact, credit institutions
are both obliged to replace pledged securities when they are redeemed by the issuer and to reinforce
the collateral where a devaluation in securities causes their value to drop below that of liabilities to the
Fund. Moreover, securities valuation is based upon conservative criteria, namely the application of a 10%
haircut on the minimum market value over the previous 30 days.
Irrevocable payment commitments ensure that, by virtue of legal rules and regulations, as well as clauses
included in each contract signed between the Fund and member institutions, a number of important
requirements are met, more specifically:
• They are converted into liquidity in a short period of time, by virtue of either their mandatory
settlement within three days of receiving a notification by the Fund or the seizure, upon expiry of
that time limit, of pledged securities, which must be highly liquid as laid down in the regulations;
• They carry a low market risk, given that the value of commitments is fixed and fluctuations in the
value of collateral are fully covered by the debtor institution which must compulsorily increase the
securities pledged as collateral.
Pursuant to the RGICSF, the use of irrevocable payment commitments shall not, in any given year, exceed
the limit set by Banco de Portugal on an annual basis, which shall never be higher than 75%. This upper
limit was set by Banco de Portugal between 2000 and 2003, but since then the limit on commitments that
institutions may take on instead of paying an annual contribution has been gradually reduced. Between
2008 and 2011, the limit was set at 10% and in 2012 member credit institutions are not authorised,
for the first time, to use irrevocable payment commitments (see chart).
REGULATORY LIMIT OF IRREVOCABLE PAYMENT COMMITMENTS
80%
70%
60%
50%
40%
30%
20%
10%
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0%
This decision was underpinned by the intention to reduce the share of these instruments in the financial
means that are directly managed by the Fund, taking into account the EU initiatives regarding the revision of the Directive on deposit guarantee schemes. Such initiatives should include the setting of both
I
30
a target level for the capitalisation ratio of EU guarantee schemes and a limit to the share of irrevocable
payment commitments that may be included in the calculation of guarantee schemes’ available financial
means for the purpose of calculating that target level.
As at 31 December 2011 the total amount of irrevocable payment commitments accumulated over time
by member credit institutions amounted to €444.4 million, accounting for around 32% of the Fund’s
total own resources.
On that date, securities given as a pledge to guarantee these irrevocable payment commitments were
mainly composed of Portuguese public debt, with a market value of €539.1 million (i.e. 121% of the
nominal value of commitments).
6. FINANCIAL MANAGEMENT OF THE FUND10
I
2011 was marked by the worsening of the sovereign debt crisis in the euro area. Similarly to Ireland and
31
Greece in 2010, Portugal requested financial assistance from the International Monetary Fund and the
6.1. MACROECONOMIC ENVIRONMENT AND FINANCIAL MARKET DEVELOPMENTS
European Union in April 2011.
The Economic and Financial Assistance Programme to Portugal comprises a package amounting to €78
billion in loans, covering financing needs for the period up to mid-2014, assuming Portugal can return
to capital markets in the course of 2013.
As a condition to obtain financing, the Portuguese Government has committed itself to undertake
measures to adjust macroeconomic and structural imbalances, while providing for the implementation of various measures to reduce public spending and to increase labour productivity and economic
competitiveness. These measures are listed in detail in the Memorandum of Understanding, which was
signed in mid-May 2011.
In 2011 economic activity contracted. It is estimated11 that gross domestic product has recorded a
negative real change of -1.6 per cent, contrasting with 1.4 per cent growth in 2010. Annual average
inflation stood at 3.6 per cent, up from 1.4 per cent in 2010. This rise in inflation was largely due to an
increase in indirect taxes.
In the other euro area countries, budgetary monitoring policies were also adopted, which eventually
impacted on economic activity developments and consumer prices. According to preliminary estimates
published by Eurostat, the euro area economy increased by 1.4 per cent in 2011, decelerating somewhat
from 2010 (1.9 per cent growth). Annual average inflation stood at 2.7 per cent, up from 1.6 per cent
in 2010.
In the particular case of Greece, a number of adjustment measures were successively implemented
under the Economic and Financial Assistance Programme to Greece, with the purpose of monitoring
and consolidating government accounts. Nonetheless, due to the difficulty in reaching budgetary control
goals, a debt renegotiation process was initiated, in cooperation with the private sector.
Against this background, EU policy-making bodies have started negotiation processes aimed at guaranteeing stricter budgetary discipline and control by the Member States.
Nevertheless, the risk of the crisis spreading to other Member States, namely Italy and Spain, and fears
about its implications for the European financial sector and the real economy led the European Central
Bank (ECB) to make significant market interventions towards the end of the year, by cutting the refinancing rates and purchasing Spanish and Italian government debt. Thus, following an increase of 50 basis
points (b.p.), in the first half of the year, the key ECB interest rate reversed its trend, and ended 2011 at
a level similar to that seen at the beginning of the year (1 per cent).
At the last 2011 meeting, held on 8 December, the ECB Governing Council, in addition to decreasing the
interest rate on the main refinancing operations by 25 b.p., decided to conduct two liquidity-providing
10 In accordance with the ‘Plan for the investment of the financial resources of the Deposit Guarantee Fund’, laid down in Article 163
of the RGICSF, the Fund may only invest in euro-denominated instruments.
11 Source: Eurostat.
operations, for an unlimited amount and with a maturity of three years. In the first of these operations,
conducted on 22 December, €489 billion was allotted.
I
The ample liquidity provided by the monetary policy, the safe-haven status of German government debt
among investors and expectations that the ECB’s main refinancing rate would remain at historically low
levels, contributed to a significant decrease in yields on benchmark euro area government debt securities,
which ranged between 32 b.p. (short term) and 115 b.p. (five years) at the end of the year (Chart 2).
Chart 2
DEVELOPMENTS IN EURO AREA YIELD CURVES IN 2011
2.50
Interest rate (%)
2.00
1.50
1.00
0.50
0.00
0
1
2
3
4
5
Time horizon (years)
30 Dec 2010
30 Dec 2011
Sources: Bloomberg and Deposit Guarantee Fund
These developments were not observed in a large number of euro area countries, where the
government bond yield differentials versus the corresponding German bond yield increased, in some
cases very sharply (Charts 3 and 4). In particular, countries that are considered to have more fragile public
accounts or whose financial systems are weaker remained, for the greater part of the year, under strong
pressure from investors. Nevertheless, pressures eased somewhat towards the end of the year, following
a liquidity-providing operation with a maturity of three years conducted by the ECB.
Chart 3
DIFFERENTIALS BETWEEN EUROPEAN AND GERMAN (THREE-MONTH) GOVERNMENT BONDS
450
400
Basis Points
32
350
300
250
200
150
100
50
0
Nl
Es
It
Pt
30 Dec 2010
15
Fr
34
10
136
73
373
30 Dec 2011
19
59
11
259
200
410
Sources: Thomson Reuters and Deposit Guarantee Fund
Be
Chart 4
DIFFERENTIALS BETWEEN EUROPEAN AND GERMAN (TWO-YEAR) GOVERNMENT BONDS
I
16,000
33
12,000
10,000
8,000
6,000
4,000
2,000
0
Fr
Be
At
Fi
Nl
Gr
Pt
Es
It
Ir
30 Dec 2010 15
110
36
11
15
1,148
370
278
196
495
30 Dec 2011 69
210
62
33
24
13,335 1,442 317
475
744
Sources: Thomson Reuters and Deposit Guarantee Fund
Note: Given that there are no government bonds with the maturities relevant for the analysis and considering that differences of a few months have material
impact on the two-year maturity, the chart is based on linear interpolations between real bonds of the countries under review.
6.2. PORTFOLIO STRUCTURE AND RISK CONTROL
The Deposit Guarantee Fund continued to follow a conservative investment policy, which is embodied
in the ‘Plan for the investment of the financial resources of the Deposit Guarantee Fund’ and reflected
in the structure of the benchmark portfolio selected by the Investment Committee. Therefore, amid a
deteriorating budgetary position in most euro area countries, the investment strategy continued to be
geared to limiting portfolio exposure to credit, market and liquidity risks.
As at 31 December 2011 the market value of the Fund’s asset portfolio stood at €958.5 million, i.e. a 4.2
per cent increase compared with 31 December 2010 (€919.5 million). This change incorporates annual
contributions paid by member credit institutions, totalling €35.7 million, the settlement of irrevocable
payment commitments by one credit institution, amounting to €0.6 million, and repayments to BPP’s
depositors, which reached €8.2 million in 2011. Excluding these factors, the market value of the Fund’s
portfolio rose by 1.1 per cent.
As at 31 December 2011, the portfolio of the Deposit Guarantee Fund comprised Treasury bills and
bonds issued by euro area countries (86.8 per cent) and deposits with Banco de Portugal (13.2 per cent).
Basis Points
14,000
Table XI
GEOGRAPHICAL BREAKDOWN AS AT 31 DECEMBER 2011
I
34
Amount (€)
Weight
Germany
194,039,103
20.2%
Belgium
38,778,475
4.0%
France
272,503,163
28.4%
Netherlands
199,356,748
20.8%
Portugal (*)
216,868,441
22.6%
36,971,957
3.9%
Supranational
(*) Includes deposits with Banco de Portugal and the deduction of taxes to be paid.
The conservative nature of the investment policy, adjusted to the purpose of guaranteeing deposits,
also entailed low exposure to interest rate risks. The average modified duration of the portfolio stood
at 0.3 in 2011, with approximately 64% of the portfolio corresponding to investments with a residual
maturity of up to three months.12
Table XII
MODIFIED DURATION AND RATE OF RETURN BY MATURITY SEGMENT12
Maturity segment
Average weight
(%)
Average modified
duration
Rate (T.W.R.R.)
Up to 1 month
26.9%
0.0
0.9%
1 to 3 months
37.0%
0.1
1.3%
3 to 6 months
22.5%
0.3
2.2%
6 months to 1 year
13.2%
0.7
1.0%
1 to 3 years
0.4%
0.6
0.1%
Total
100%
0.3
1.5%
Impact of transaction costs
Impact of taxes
Net total of the Fund’s portfolio
0.0%
-0.3%
1.1%
The market risk of the Fund’s portfolio, measured by the Value at Risk (VaR) over a one-month time
horizon, with a 95% confidence level, stood at €1.5 million in the course of 2011, i.e. 0.16 per cent,
on average, of the portfolio value.
12 Time-weighted rate of return (T.W.R.R.); all rates of return are annualised and net of taxes, unless otherwise indicated.
6.3. PROFIT AND LOSS
Amid great financial market instability in the euro area, two distinct movements were observed in
yield curves, at the relevant maturities for the Fund’s portfolio: a downward shift in Germany, France,
I
the Netherlands and supranational organisations to which the Fund is exposed and an upward shift in
In 2011 overall gross return of the Fund stood at 1.5 per cent. Return net of taxes and management
costs was 1.1 per cent.
Portfolio returns did not show a clear relationship between investment maturity and return, due to the
different distribution of issuers by maturity segments (Table XII).
As the Fund’s investment policy follows the ‘held to maturity’ principle, and given that no defaults on
portfolio instruments were observed, there was a positive correlation between return and the risk level
for each issuer perceived by the market (Table XIII).
Table XIII
RETURN BY ISSUER
T.W.R.R.
Average Modified
Duration
Average Weight %
Germany
0.9%
0.3
9.8%
Belgium
1.7%
0.3
13.7%
Spain (*)
1.9%
0.2
10.4%
France
0.8%
0.2
24.7%
Netherlands
0.8%
0.3
16.4%
Italy (*)
1.5%
0.2
11.8%
Portugal
4.4%
0.4
13.1%
-1.1%
0.8
0.1%
Total
1.5%
0.3
100.0%
Impact of transaction costs
0.0%
Supranational (*)
Impact of taxes
Net total of the Fund’s portfolio
-0.3%
1.1%
(*) As exposure to debt from these issuers only occurred during part of the year, rates of return are annualised.
The Fund’s return, net of taxes and management costs, was higher than that on a ‘minimum risk’ asset,
mainly due to the diversification of investment by countries with varying credit quality.
35
Belgium, Spain, Italy and Portugal.
Table XIV
RATIO OF NET RETURN ON THE FUND’S PORTFOLIO TO A MINIMUM RISK ASSET13
I
36
2011
Fund
(P)
Minimum risk asset (MRA)
Excess return
(P-MRA)
1.1%
0.6%
0.6%
7. REGULATORY AND LEGISLATIVE CHANGES13
At the end of 2011, the limit of the guarantee was set at €100,000 on a permanent basis. Moreover,
legislative changes were introduced with a view to strengthening the legal framework applicable to
the Fund. These changes, which were published in early 2012, are explained in greater detail in Box 1.
As regards the contribution scheme to the Fund, to which member institutions are subject, Banco de
Portugal introduced a number of changes to be applied in 2012 (Instructions No 24/2011 and No 25/2011).
While maintaining the base rate unchanged at 0.03%, Banco de Portugal abolished the reduced rate of
0.01% applicable to deposits placed at offshore branches in the free trade zones of Madeira and Santa
Maria Island. Moreover, Banco de Portugal decided that, in 2012, member credit institutions would not be
allowed to assume irrevocable payment commitments instead of paying the annual contribution, which
shall help to reduce the share of these instruments vis a vis the financial means directly managed by the
Fund (according to the contribution framework established for 2010, in the course of 2011 member
institutions were given the possibility of paying up to 10% of the respective annual contribution in
the form of irrevocable payment commitments). The minimum annual contribution, in turn, remained
unchanged at €17,500.
8. AUDITING OF THE FUND
The Board of Auditors of Banco de Portugal is the entity responsible for monitoring the Fund’s activity,
pursuant to the provisions laid down in Article 171 of the RGICSF and Article 25 of the Fund’s Regulations.
The opinion of the Board of Auditors of Banco de Portugal on the Fund’s Annual Report and Accounts
for 2011 is included in an annex.
The financial statements of the Fund for 2011 were also subject to an external audit conducted by Ernst
& Young.
The Court of Auditors, which is responsible for the successive auditing of the Fund’s activities, pursuant
to the legal provisions in force, received all the necessary information regarding the year 2010, including
the Annual Report and Accounts, after approval by Decision No 459/11/SETF of the Secretary of State
for the Treasury and Finance of 2 April 2011.
13 The net return on a minimum risk asset results from investments in one-month French government bonds, the shortest maturity for
which liquidity levels are still acceptable. For tax purposes, it is assumed that the coupon rate on one-month government bonds is
equal to its yield-to-maturity.
9. SUPPORT BY BANCO DE PORTUGAL AND COOPERATION OF
MEMBER INSTITUTIONS
Pursuant to Article 168 of the RGICSF, Banco de Portugal shall provide the technical and administrative
I
services required for the Fund’s regular operation.
In 2011 Banco de Portugal continued to cooperate with the Fund as required for the conduct of its
business, within the scope of the Protocol signed in January 1995 and updated in 2010. The support
given by Banco de Portugal mainly consists in providing human resources to ensure the Fund’s Secretariat, the accounting records of operations and the preparation of the annual financial statements, the
management of the Fund’s financial means, the participation in procedures for the collection of the
annual contributions, and legal assistance, where necessary.
The Management Committee of the Fund expresses its appreciation to all units of Banco de Portugal
that contributed with their expertise and administrative support to the Fund. Among these units, special
reference should be made to the Deposit Guarantee Fund Support Unit, the Accounting Department,
the Payment Systems Department, the Markets and Reserve Management Department, the International
Relations Department, the Legal Services Department, the Administrative Services Department, the Banking
Prudential Supervision Department and the Banking Conduct Supervision Department.
The Management Committee expresses its appreciation for the special cooperation provided by the Legal
Services Department, in the context of the repayment of deposits with BPP.
The Management Committee again notes the cooperation with the Fund by member credit institutions
and Associação Portuguesa de Bancos (Portuguese Banking Association), in particular as regards the
enforcement of the contribution scheme.
Lisbon, 7 March 2012
Chairman
Pedro Miguel de Seabra Duarte Neves
Member
João Maurício Fernandes Salgueiro
Member
Carlos Manuel Durães da Conceição
37
FINANCIAL STATEMENTS AND NOTES
ON THE FINANCIAL STATEMENTS
II
10. FINANCIAL STATEMENTS
II
BALANCE SHEET
EUR thousands
Notes
31 Dec 2011
31 Dec 2010
Financial assets held for trading
3
835,232,5
920,385.6
Cash and bank deposits
4
126,108.1
60.6
State and other public entities
5
0.9
199.8
Other receivables
6
39.6
38.8
961,381.0
920,684.8
7
444,433.9
441,356.5
8
3.7
4.7
444,437.6
441,361.2
1,405,818.6
1,362,046.0
9
1,397,010.3
1,354,056.0
10
703.5
1,482.7
5
1,831.6
628.0
11
28.5
8.3
2,563.6
2,119.0
40
Assets
Current assets
Financial investments
Non-current assets
Member institutions
Contributions - irrevocable payment commitments
Tangible fixed assets
Total Assets
Own resources
Liabilities
Current liabilities
Claimants of deposits to be repaid
State and other public entities
Other payables
Non-current liabilities
Provisions
12
5,215.0
5,575.4
Deferred tax liabilities
15
1,029.7
295.6
6,244.7
5,871.0
8,808.3
7,990.0
1,405,818.6
1,362,046.0
Total liabilities
Total own resources and liabilities
PROFIT AND LOSS ACCOUNT
EUR thousands
II
Notes
31 Dec 2011
31 Dec 2010
13
226.8
143.2
Gains/losses on financial investments
14
13,706.0
5,083.3
Income tax
15
2,912.6
1,088.5
11,020,2
4,137.9
Income from the allocation of available resources
Staff costs
16
38.0
33.3
Supplies and services of third parties
17
276.7
283.3
Other income and gains
18
153.0
0.0
Other costs and losses
18
194.3
11.6
10,664.4
3,809.9
1.0
1.2
10,663.3
3,808.7
Profit/loss before provisions,
impairment, depreciation and amortisation
Costs/reversal of depreciation and amortisation
Net Profit/Loss
8
Financial Statements and Notes on the Financial Statements
41
Interest and similar income and expenses
-
Return of contributions paid in excess
599,570.6
445,056.2
-103,347.2
248,743.4
3,808.7
-3,808.7
-3,808,7
-
-
-
-
10,663.3
196,323.9
-7,072.8
3,808.7
-
-
-
-
Position as at 31 December 2011
3,661.8
35,701.9
-
-2,361.2
-4,711.6
-
-
244,934.8
10,663.3
-
-
-
-
3,661.8
-
-
-
-1.6
35,703.5
-96,274.4
-11,042.0
-11,042.0
-
-
11,461.1
-
11,042.0
Net profit/loss for the year
-
-
Provisioning for deposits covered by the guarantee
Profit distribution
-
Repayment of deposits covered by the guarantee
-
Contributions by member institutions
Contributions
441,394.4
11,042,0
11,042.0
-
-
-
233,892.7
Net profit
3,808.7
563,868.6
-96,274.4
-5,575.4
-90,699.0
-
-
Reserves
3,782.2
-
-
3,782.2
437,612.2
Irrevocable Payment
Commitments
Repaid deposits
3,808.7
35,228.0
-
-
35,228.0
528,640.6
Cash
Períodical
Contributions
Net profit for the year
196,323.9
-
Provisioning for deposits covered by the guarantee
Profit distribution
-
-
196,323.9
Inicial
Contributions by member institutions
Contributions
STATEMENT OF CHANGES IN OWN RESOURCES
EUR thousands
1,397,010.3
10,663.3
32,290.9
-
-2,361.2
-4,711.6
-1.6
39,365.3
1,354,056.0
3,808.7
-57,264.2
-
-5,575.4
-90,699.0
11,461.1
-419.1
39,010.2
1,407,511.5
OWN RESOURCES
II
42
CASH FLOW STATEMENT
EUR thousands
31 Dec 2011
31 Dec 2010
II
Cash flows from operating activities
35,703.5
35,228.0
Liquidation of irrevocable payment commitments
584.4
-
Return of contributions paid in excess
- 1.6
-
- 8,212.4
- 89,216.3
Income tax payment
- 1,163.9
- 1,072.7
33.3
- 330.1
26,943.3
- 55,391.1
-2,755,397.4
-3,545,132.9
2,854,481.4
3,600,276.5
20.1
156.1
99,104.2
55,299.7
-
- 1.0
-
- 1.0
126,047.5
- 92.4
60.6
153.0
126,108.1
60.6
Other receipts/payments
Cash flows from operating activities [1]
Cash flows from investing activities
Payments relating to:
Receipts from:
Interest and similar income
Cash flows from investing activities [2]
Cash flows from financing activities
Payments regarding:
Other financing operations
Cash flows from financing activities [3]
Change in cash and cash-like instruments [4]=[1]+[2]+[3]
Cash and cash-like instruments at the start of the period
Cash and cash-like instruments at the end of the period
43
Receipts from contributions
11. NOTES ON THE FINANCIAL STATEMENTS
(amounts in EUR thousands, unless otherwise indicated)
II
44
NOTE 1 ACTIVITY OF THE FUND
The Fundo de Garantia de Depósitos – FGD (Deposit Guarantee Fund) (hereinafter referred to as ‘the Fund’)
is a public-law legal person with administrative and financial autonomy, established by the Regime Geral
das Instituições de Crédito e Sociedades Financeiras – RGICSF (Legal Framework of Credit Institutions
and Financial Companies), approved by Decree-Law No 298/92 of 31 December. It has its head office in
Lisbon and operates within Banco de Portugal, which provides the technical and administrative services
required for the Fund’s regular operation.
The purpose of the Fund is to guarantee the repayment of the overall cash balance of each depositor, up
to a maximum of €100,000, under certain conditions, provided that the deposits of the relevant credit
institution become unavailable. Following recent amendments to the RGICSF, the Fund’s purpose also
encompasses the provision of financial assistance to the Fundo de Garantia do Crédito Agrícola Mútuo
– FGCAM (Mutual Agricultural Credit Guarantee Fund), when its financial resources prove insufficient
to fulfil its obligations associated with the repayment of deposits, as well as the provision of financial
support to the adoption of resolution measures, namely the sale of covered deposits or the transfer of
covered deposits to a bridge bank.
NOTE 2 BASIS FOR PRESENTATION AND MAIN ACCOUNTING POLICIES
2.1. Basis for presentation
In accordance with the provisions laid down in Article 170 of the RGICSF, the accounting principles
that guide the drawing up of the Fund’s financial statements are set out in its own Chart of Accounts.
Therefore, the Fund’s financial statements as at 31 December 2011 were prepared in accordance with
its Chart of Accounts, which is based on the International Accounting Standards (IAS), approved by
Regulation (EC) No 1606/2002, with the amendments introduced up to 1 January 2010. The specific
provisions laid down in the Chart of Accounts supersede the IAS, given that they provide an appropriate
framework for the legal and operational nature of the Fund. Against this background, the recognition
and measurement criteria set out in the applicable IAS were adopted, except if otherwise provided for
in the Chart of Accounts.
The Chart of Accounts of the Fund defines the models to be used in the financial statements and the
minimum content of explanatory notes. The financial statements have been drawn up on a historical cost
basis, excluding those assets recorded at fair value, namely financial assets held for trading.
2.2. Main accounting policies
The main accounting policies and valuation criteria used in the preparation of the financial statements
for the year 2011 are the following:
a)
Own resources: Contributions and irrevocable payment commitments
The contributions paid to the Fund are one of the components of its own resources, in addition to the
reserves arising from profit distribution of previous years, being recognised as such on the dates set out
in Article 161 of the RGICSF.
Member institutions pay an initial contribution to the Fund upon registration for the commencement
of their activity and, subsequently, an annual contribution, the value of which is calculated according
to the contribution categories set by Banco de Portugal, depending on the average balance of deposits
II
Member institutions can pay the contribution in cash or they can be exempt from making such payment,
45
up to a limit of 75% (set by Banco de Portugal on an annual basis), provided they commit themselves
irrevocably and through the collateralisation of transferable securities to pay the Fund, at any time as
required by the latter, in full or in part, the amount of the contribution that was not paid in cash. In
accordance with the regulations governing the Fund, periodical contributions are fully included in “Own
resources”. The share that corresponds to irrevocable payment commitments is recognised against an
asset item. This asset is measured at cost less impairment losses.
In exceptional cases, member institutions pay special contributions, as provided for in Article 162 of
the RGICSF.
b)
Financial assets are classified as held for trading on the acquisition date, when they are acquired with
the main purpose of being traded in the short term.
Purchases and sales of financial assets held for trading are recognised on the trade date, i.e. the date on
which the Fund commits itself to purchase or sell the asset. These financial assets are initially recognised
at fair value, and transaction costs are directly recognised in profit/loss. Subsequently, changes in the
fair value are recognised in profit/loss.
c)
In the course of its activity, the Fund may be called on to repay deposits with a member institution. In
this case, a liability is recognised against a decrease in the Fund’s own resources. This liability item is
measured at the nominal value of the amount to be repaid and it decreases as depositors are repaid. In
the event of the Fund not being able to make repayments for reasons which can be attributed to the
depositor, the remaining liabilities are offset against a corresponding increase in own resources.
Pursuant to Article 167 of the RGICSF, the Fund shall be subrogated to the rights of depositors to the
extent of the repayment it has made. Should the Fund receive compensation for the repayment of deposits
covered by the guarantee, this amount is recognised on the assets side of the balance sheet against an
increase in own resources, but only when the Fund is given a legal guarantee that it will be repaid and is
aware of the amount to be recorded. This asset is valued at cost (nominal value) less impairment losses.
d)
Provision for deposits covered by the guarantee and contingent liabilities
Triggering the deposit guarantee may involve situations that raise legal doubts about the eligibility of
deposits for repayment purposes. These situations are subject to an assessment to check whether (i)
there is a current legal obligation derived from a past event, (ii) an outflow of funds will probably occur
in order to meet that obligation, and (iii) it is possible to make a reliable estimate of the amount in
question. Where these conditions are cumulatively met, a provision is made for deposits covered by the
guarantee, offset against a reduction in the Fund’s own resources, in accordance with the accounting
policy described in (c) above.
in the previous year.
Where it is deemed that, as regards the second condition referred to above, the outflow of funds to meet
the said obligation is possible (but not probable), a contingent liability is recognised to the detriment of
making a provision.
II
46
e)
Cash and cash equivalents
As regards cash flows, the aggregate “Cash and cash equivalents” covers short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value. In this context, it includes cash and bank deposits.
f)
Income tax
The Fund, as a public-law legal person, is exempt from corporate income tax (IRC), in accordance with
Article 9 of the Código de Imposto sobre o Rendimento das Pessoas Colectivas – CIRC (Corporate
Income Tax Code), except for capital income as defined for personal income tax (IRS) purposes (Article
5 of the Código do Imposto Sobre o Rendimento das Pessoas Singulares – CIRS (Personal Income Tax
Code) – Category E).
Capital income earned in Portugal is subject to tax withholding at source, at the final rate in force. As
capital income earned abroad is not subject to tax withholding in Portugal, the Fund must submit an
income tax statement to the Portuguese tax administration for tax payment purposes. Where capital
income is not subject to taxation in the country of origin of income, the final withholding rate in force
in Portugal is applied. Where capital income is subject to tax withholding in the country of origin, the
taxable amount shall correspond to the difference between the tax rate applicable in Portugal and the
withholding tax rate applicable abroad.
The income tax recognised in the Fund’s profit and loss comprises current taxes and deferred taxes
resulting from: (i) future recovery of the recorded amount of assets recognised in the balance sheet, or
(ii) transactions and other events in the current period recognised in the Fund’s financial statements.
NOTE 3 FINANCIAL ASSETS HELD FOR TRADING
The item “Financial assets held for trading” includes debt securities acquired by the Fund within the
scope of its investment policy.
FINANCIAL ASSETS HELD FOR TRADING
EUR thousands
31 Dec 2011
Bonds issued by Supranational organizations
31 Dec 2010
36,965.4
-
Treasury bonds (zero coupon)
161,817.2
-
Treasury bills
636,449.9
920,385.6
835,232.5
920,385.6
Government debt securities
As at 31 December 2011 the Fund’s securities portfolio was composed of government debt securities
issued by euro area countries and bonds issued by supranational organisations. Their accounting treatment
is described in Note 2.2. (b). The Fund’s Annual Report contains a detailed description of the portfolio
II
structure and risk control.
NOTE 4 CASH AND BANK DEPOSITS
The item “Cash and bank deposits” records the amount of cash and demand deposits with Banco de
Portugal and with a number of financial institutions.
CASH AND BANK DEPOSITS
EUR thousands
31 Dec 2011
Cash
Bank deposits
31 Dec 2010
0.4
0.4
126,107.7
60.2
126,108.1
60.6
As at 31 December 2011 deposits with Banco de Portugal amounted to €126,080,000.
NOTE 5 STATE AND OTHER PUBLIC ENTITIES
The item “State and other public entities”, recorded in assets as at 31 December 2011, registers the
credit for international double taxation regarding income from Italian Treasury bonds, which will be
deducted from payable taxes for 2011. As at 31 December 2010, the amount recorded under this item
corresponds to the tax withheld at source by the Spanish tax administration relating to income earned
on Spanish Treasury bonds on which a pending reimbursement request was fulfilled in 2011.
The item “State and other public entities”, recorded in liabilities, basically comprises the estimated amount
of taxes to be paid on income earned on government debt securities in 2011, which is not withheld at
source and, residually, the amounts withheld at source by the Fund regarding self-employment earnings,
to be paid to the State within the legal deadlines.
NOTE 6 OTHER RECEIVABLES
The item “Other receivables” records, as at 31 December 2011: (i) the nominal amount of securities
pledged as collateral provided by BPP to the Fund, representing the share of contributions of past years
corresponding to the assumption of irrevocable payment commitments (€38,000), and (ii) the amount
to be repaid to the Fund by member credit institutions, regarding custody fees paid on securities given
as pledge in irrevocable payment securities contracts.
47
NOTE 7 CONTRIBUTIONS - IRREVOCABLE PAYMENT COMMITMENTS
The item “Contributions - irrevocable payment commitments”, on the assets side of the Fund’s balance
II
sheet, registers the nominal value of irrevocable payment commitments undertaken by member credit
institutions in favour of the Fund, regarding annual periodical contributions, in accordance with the
48
accounting policy described in Note 2.2. (a). Chapter 5 of the Fund’s Annual Report describes in more
detail the contributions paid for the year.
NOTE 8 TANGIBLE FIXED ASSETS
This item is broken down as follows:
TANGIBLE FIXED ASSETS
Milhares de euros
31 Dec 11
Gross
assets
Office equipment
Other tangible assets
Accumulated
depreciation
31 Dec 10
Total
Gross
assets
Accumulated
depreciation
Total
10.1
6.4
3.7
10.1
5.3
4.7
0.2
0.2
-
0.2
0.2
-
10.2
6.6
3.7
10.2
5.5
4.7
Changes recorded in 2011 were exclusively due to depreciation expenses from tangible fixed assets in
use. Depreciation of tangible fixed assets is calculated according to a constant quota method, by applying
the depreciation rates defined in tax terms, which are deemed to reflect the period for which the asset
is expected to be available for use.
NOTE 9 OWN RESOURCES
The Fund’s own resources comprise the initial contributions of Banco de Portugal, the initial and periodical contributions of member institutions and income from the investment of the Fund’s resources.
The composition and changes in this item are shown in the Statement of Changes in Own Resources.
Annual periodical contributions for 2011 amounted to €39,365,000, corresponding to: (i) contributions
paid in cash and (ii) contributions, whose payment was replaced under the terms of the law by the
assumption of irrevocable payment commitments collateralised by securities eligible for this specific
purpose (see Notes 7 and 19), in accordance with the accounting policy described in Note 2.2. (a).
In 2011 the Fund reimbursed part of the annual periodical contribution paid in excess by one member
institution in 2010, to the amount of €1,600.
In April 2010 Banco de Portugal withdrew the authorisation of Banco Privado Português, SA (BPP) to
pursue its business. In view of the unavailability of deposits observed on that date, under the terms of
the law, the Fund triggered the guarantee covering the deposits with that credit institution, having effectively recognised, in cumulative terms, repayment rights amounting to €98,132,000 up to 31 December
2011 (€90,699,000 up to 31 December 2010). Amounts pending repayment are recorded in the item
“Claimants of deposits to be repaid” (see Note 10).
The Fund also recognised the right to repayment of deposits, which without being subject to any
II
other reason for exclusion or doubt: (i) are pledged, namely for the benefit of BPP, as a guarantee of
repayment was also recognised in other specific cases, which had initially been suspended due to doubts
about the existence of the right to repayment. In the meantime, however, the depositors submitted the
required declaration and the respective payment was made in 2012. For these situations, a provision for
guaranteed deposits was made to the amount of €5,215,000 on 31 December 2011 (€5,575,000 on
31 December 2010) – see Note 12.
The amounts whose right to repayment has been recognised in 2011 are reflected in a reduction of the
item “Own resources” to the amount of €7,073,000, in accordance with the accounting policy described
in Note 2.2. (c) and (d). This amount, incorporated in the Statement of Changes in Own Resources, is
calculated as the effective repayment value of deposits, to the amount of €8,212,000 (as stated in the
Cash Flow Statement), less the repayment value of the deposits whose right to repayment had already
been recognised by the Fund in 2010, but which were only settled in 2011 (-€779,000 – see Note 10),
and also net changes in the provision for guaranteed deposits (-€360,000), as described in Note 12.
NOTE 10 CLAIMANTS OF DEPOSITS TO BE REPAID
This item records the amounts relating to claims of BPP’s depositors, whose right to repayment was
recognised by the Fund (see Note 9), but whose payment was not made for operational reasons related
to the lack of essential data for the correct transfer of the funds.
NOTE 11 OTHER PAYABLES
The item “Other payables” includes amounts regarding: (i) fees to be paid relating to the audit of the
Fund’s financial statements for the year 2011 (€18,000), (ii) payment of the rent due in 2011 on the
premises where the Fund is located (€5,000), and (iii) salaries paid in 2011 to remunerated members of
the Fund’s Management Committee (€5,000).
NOTE 12 PROVISIONS
Within the repayment process of BPP’s depositors, referred to in Note 9, not all the amounts that were
included in the list of deposits covered by the Fund’s guarantee that was provided by BPP have been
repaid, as their effective right to repayment was doubtful or, where it was considered that there was
such a right, questions arose as to who should receive the said repayment.
As at 31 December 2011 it was considered probable the future repayment of deposits on which a pledge
was constituted and which were not the object of any other reason for exclusion or doubt. These deposits
have not yet been repaid as there are doubts about the holder of the right to repayment by the Fund (i.e.
if repayments should be made to the depositor or the pledgee). The payment of deposits whose holder
also had debts to BPP fallen due was also seen as probable, along with other specific situations that had
initially been suspended as there were doubts about whether any repayment was due. In the meantime,
49
the financing obtained from that bank, or (ii) are associated with debts to BPP fallen due. The right to
however, the required declaration was submitted by the depositors in question and, consequently, these
repayments have already been made in 2012.
II
The provision for deposits covered by the guarantee, initially made in 2010 with the purpose of covering
the specific liabilities mentioned above, amounted to €5,215,000 at the end of 2011, in accordance with
50
the accounting policy described in Note 2.2. (d), due to the following accounting movements:
PROVISIONS
EUR thousands
2011
2010
Covered deposits
Initial balance
New provisions
Use of provisions
Final balance
5,575.4
-
2,361.2
5,575.4
-2,721.6
-
5,215.0
5,575.4
NOTE 13 INTEREST AND SIMILAR INCOME AND EXPENSES
The item “Interest and similar income and expenses” is broken down as follows:
INTEREST AND SIMILAR INCOME AND EXPENSES
EUR thousands
31 Dec 2011
31 Dec 2010
Interest received
Bonds issued by paragovernmental/supranational organisations
Treasury bonds
Demand deposits
Total interest received
Total interest paid
17.4
122.4
208.7
-
0.8
21.7
226.8
144.2
-
1.0
226.8
143.2
NOTE 14 GAINS/LOSSES ON FINANCIAL INVESTMENTS
The item “Gains/losses on financial investments” reflects fair value changes in financial assets held for
trading, in accordance with the accounting policy described in Note 2.2. (b). This item is broken down
II
as follows:
GAINS/LOSSES ON FINANCIAL INVESTMENTS
EUR thousands
31 Dec 2011
Gains
Bonds issued by paragovernmental/
supranational organisations
Losses
31 Dec 2010
Total
Gains
Losses
Total
5.4
7.4
-2.0
-
22.2
-22.2
Treasury bonds
326.7
-
326.7
-
-
-
Treasury bonds (zero coupon)
114.7
-
114.7
75.0
-
75.0
13,307.6
40.9 13,266.7
5,183.3
152.8
5,030.5
13,754.3
48.3 13,706.0
5,258.3
175.0
5,083.3
Government debt securities
Treasury bills
NOTE 15 INCOME TAX
The income tax recognised in the Profit and Loss Account in 2011 and 2010 is broken down as follows:
INCOME TAX
EUR thousands
31 Dec 2011
31 Dec 2010
Current tax
Demand deposits
0.2
4.2
2,178,3
1,207.8
2,178.5
1,212.0
734.2
-123.5
734.2
-123.5
2,912.6
1,088.5
Deferred tax
The item “Deferred tax liabilities”, recorded on the liabilities side of the Fund’s balance sheet, reflects
the taxation of income already recognised in the Fund’s accounts, relating to financial assets held for
trading, but whose tax will only be paid in subsequent periods, in accordance with the accounting policy
described in Note 2.2. (f).
51
NOTE 16 STAFF COSTS
The item “Staff costs” records expenditure with the remunerated members of the Management Committee,
as well as the corresponding social security charges.
52
The increase from the previous fiscal year is due to the fact that another member of the Management
II
Committee started to be remunerated, following a change in the conditions that kept that payment in
abeyance, as from May 2010. This effect is dampened by the 5% reduction in the basic remuneration
established by the members of the Fund’s Management Committee, to prevail as from and including June
2010, and a 10% reduction in the remuneration of one of the members of the Management Committee,
due to the accumulation of public positions, as from January 2011.
NOTE 17 SUPPLIES AND SERVICES OF THIRD PARTIES
This item is broken down as follows:
SUPPLIES AND SERVICES OF THIRD PARTIES
Specialised services
Travelling, accommodation and transportation expenses
Sundry services
EUR thousands
31 Dec 2011
31 Dec 2010
261.2
268.1
2.9
1.3
12.5
13.9
276.7
283.3
The item “Specialised services” consists mainly of the safekeeping fees paid to the securities settlement
system, within the scope of the Fund’s operational activity, and the consultancy and legal advice services
provided to the Fund, related to the triggering of the BPP’s deposit guarantee. The item “Sundry services”
consisted mainly of the payment of communications and courier expenses and the rent on the premises
where the Fund is located.
NOTE 18 OTHER PROFIT/LOSS
The item “Other income and gains” recorded, as at 31 December 2011: (i) fines paid to the Fund to the
amount of €134,000, which were imposed by Banco de Portugal, in its banking supervisory capacity, on
a member of the Fund, and (ii) valuation changes to the amount of €19,000, as at 31 December 2010,
in the securities portfolio due to a change introduced on that date in the methodology of calculating the
portfolio value, following the replacement of the operational asset management system used by the Fund.
The item “Other costs and losses” as at 31 December 2011 consisted mainly of: (i) the recognition of
losses to the amount of €191,000 regarding non-recoverable tax credit for income on Portuguese Treasury bills earned in 2010 and (ii) the payment of €2,000 regarding banking services related to transfers
made to depositors, following the triggering of the BPP’s deposit guarantee, as described in Note 9.
NOTE 19 CONTINGENT ASSETS
As at 31 December 2011, the Fund recorded the following contingent assets:
•
Securities pledged as collateral, received as a guarantee of the irrevocable payment commitments
undertaken by member institutions in favour of the Fund (see Notes 7 and 9), as well as by BPP, and
whose market value amounts to €466,281,000;
Rights on the deposits that the Fund repaid following the triggering of the guarantee on deposits
with BPP. In accordance with the provisions laid down in Article 167 (9) of the RGICSF, the Fund shall
be subrogated to the rights of depositors to the extent of the repayments it has made (€97,429,000).
Only when the Fund has the legal guarantee that it will be compensated for the repayment of deposits and is aware of the final amount to be received, will the corresponding asset be recognised in
the balance sheet, being offset against own resources. Considering the uncertainty prevailing on 31
December 2011 as to the amount and time of recovery of the repaid amounts, the above amount
is considered as a contingent asset and is not recognised in the balance sheet;
NOTE 20 CONTINGENT LIABILITIES
Within the repayment process of BPP’s depositors, referred to in Note 9, certain amounts that were
included in the list of deposits covered by the Fund’s guarantee that was provided by BPP, were nevertheless not repaid, as their effective right to repayment was doubtful. Therefore, contingent liabilities
amounted to €1,203,000 (31 December 2010: €17,255,000), considering that a potential contingent
liability may arise in respect of deposits with the following characteristics, which are being analysed on
a case-by-case basis:
• Deposits where there are reasonable doubts over the reasons for their exclusion from the guarantee,
as laid down by law;
• Amounts over which there are reasonable doubts as to whether they fall within the Fund’s scope
of coverage;
• Deposits to which new co-holders were added after the date on which BPP made public its inability
to meet payment obligations and on which Banco de Portugal adopted extraordinary liquidation
measures.
Moreover, there are still legal proceedings pending against the Deposit Guarantee Fund, although the
possibility that these might result in liabilities to the Fund appears remote.
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53
•
12. PROPOSAL FOR THE DISTRIBUTION OF RESULTS
II
54
Pursuant to the proposal of the Management Committee, profit for the year 2011, amounting to
€10,663,320, shall be transferred to Reserves.
Chairman
Pedro Miguel de Seabra Duarte Neves
Member
João Maurício Fernandes Salgueiro
Member
Carlos Manuel Durães da Conceição
OPINION OF THE BOARD OF AUDITORS OF
BANCO DE PORTUGAL
III
FUNDO DE GARANTIA DE DEPÓSITOS
III
In accordance with Article 171 of Regime Geral das Instituições de Crédito e Sociedades Financeiras
– RGICSF (Legal Framework of Credit Institutions and Financial Companies) (hereinafter referred to as
“RGICSF”) and with the provisions laid down in Article 25 (d) of the Regulations governing the Fundo
de Garantia de Depósitos – FGD (Deposit Guarantee Fund) (hereinafter referred to as “the Fund”), the
Board of Auditors of Banco de Portugal issues its opinion on the Fund’s Annual Report and Accounts
for the year 2011.
The major purpose of the Fund is to guarantee, within the established limits (the limit was set at
€100,000 by Decree-Law No 119/2011 of 26 December), the repayment of deposits with member credit
institutions, under the conditions and in compliance with the provisions of the RGICSF and respective
regulatory ordinances. The Fund may no longer co-operate in financial support initiatives to its member
credit institutions nor may it grant credit to the Investor Compensation Scheme.
As at 31 December 2011 the Fund had the following member institutions (totalling 47): 37 banks,
5 savings banks and 5 mutual agricultural credit banks not belonging to the Integrated Mutual Agricultural Credit Scheme.
The Board of Auditors, within its field of competence, systematically monitored the Fund’s activities,
analysing documents regularly sent to it by the Management Committee, supplemented by additional
data and information requested by this Board.
In the calculation of periodical contributions for the year 2011, a base rate of 0.03% (unchanged from
2010), weighted by the solvency indicator of each member institution, was applied to the amount of
deposits covered by the guarantee. In the same period, the reduced rate of 0.01% applicable to deposits
with external financial branches in the free trade zones of Madeira and Santa Maria Island remained
unchanged. The minimum contribution was also kept unchanged at €17,500.
Deposits excluded from the Fund’s guarantee, in accordance with Article 165 of the RGICSF, continue
to include deposits held by general government bodies, credit institutions, financial companies and
insurance undertakings.
Total contributions of member credit institutions reached approximately €39.4 million, remaining virtually
unchanged from 2010, of which €35.7 million corresponded to contributions paid in cash and €3.7
million to irrevocable payment commitments.
The degree of coverage of deposits guaranteed by the Fund’s financial means, defined as the ratio of
the Fund’s financial means (contributions paid, including irrevocable payment commitments, plus accumulated profit) to eligible deposits, stood at 1.3%.
Total cumulative irrevocable payment commitments undertaken by member credit institutions as a whole
amounted to €444.4 million on 31 December 2011.
57
Opinion of the Board of Auditors of Banco de Portugal
OPINION OF THE BOARD OF AUDITORS
OF BANCO DE PORTUGAL
As mentioned in opinions regarding previous years, in the recognition of irrevocable payment commitments entered into by the Fund with member credit institutions, different criteria were used by the Fund
and by the credit institutions for the recognition of the above-mentioned commitments. While in the
III
58
Fund these commitments are recognised as debts of third parties, in credit institutions they are treated
as contingent liabilities disclosed in the notes to the annual accounts.
The Fund’s own resources as at 31 December 2011 totalled €1,397 million. The change from the previous
fiscal year (+ €43 million) was due to initial and periodical contributions of member institutions, including
irrevocable payment commitments (€39.4 million), the Fund’s profit (€10.7 million) less repayments to
depositors of Banco Privado Português, S.A. (- €7.1 million).
The management of the Fund’s financial resources (Article 159 of the RGICSF) takes into account the
criteria established by the Management Committee for the investment of such resources, according to
the guidelines and regulations established in the ‘Investment plan for the Deposit Guarantee Fund’s
financial means’. The net return on the Fund’s portfolio stood at 1.1% as a result of the conservative
nature of the investment policy pursued.
The net profit for the year amounted to €10,663,320. Pursuant to the Management Committee’s proposal,
profit for the year 2011 shall be transferred to Reserves.
On the basis of the analysis carried out, and taking into account the above considerations, the certification of the Fund’s financial statements by the external auditor and the report prepared by the Audit
Department of Banco de Portugal, the Board of Auditors raises no objection to the approval of the Report
and Annual Accounts of the Fund for the year 2011, nor to the proposal for the distribution of profit
submitted by the Management Committee.
BOARD OF AUDITORS
Emílio Rui da Veiga Peixoto Vilar
Rui José da Conceição Nunes
Amável Alberto Freixo Calhau
EXTERNAL AUDITOR’S REPORT
IV
IV
60
Certification of Financial Statements
Introduction
1.
We have audited the financial statements of the Fundo de Garantia de Depósitos
– FGD (Deposit Guarantee Fund) (hereinafter referred to as “the Fund”), which
comprise the Balance Sheet as at 31 December 2011 (totalling €1,405,818,6 with
total own funds amounting to €1,397,010,3, including a net profit of €10,663,3),
the Financial Statements by Nature, the Statement of Changes in Own Resources
and the Statement of Cash Flows for the year then ended and the corresponding
Notes.
Responsibilities
2.
The Management Committee is responsible for the preparation of financial statements, which present a true and fair view of the financial situation of the Fund,
the result of its operations, changes in Own resources and cash flows, as well as
the adoption of appropriate accounting policies and criteria, and the maintenance
of an appropriate internal control system.
3.
Our responsibility is to express our professional and independent opinion based
on our audit to those financial statements.
Basis of audit opinion
4.
We conducted our audit in accordance with the Technical Standards and Revision/
Auditing Guidelines of the Ordem dos Revisores Oficiais de Contas (Portuguese
Institute of Statutory Auditors). Those standards require that the audit is planned
and performed with a view to obtaining reasonable assurance that the financial
statements are free of material misstatements. For this purpose, the audit included:
•
examining, on a sampling basis, evidence supporting the amounts and
disclosures in the financial statements, and an assessment of estimates used
in their preparation, which were based on judgments and criteria defined by
the Management Committee;
IV
External Auditor’s Report
61
•
assessing whether the accounting policies adopted and their disclosure are
appropriate to the circumstances;
•
assessing whether the continuity principle is applied; and
•
evaluating the overall adequacy of the presentation of the financial statements.
5.
Our examination also comprised verifying that the financial information contained
in the management report is in accordance with the financial statements.
6.
We believe that our audit provides a reasonable basis for our opinion.
Opinion
7.
In our opinion, the financial statements give in all material respects a true and fair
view of thefinancial position of the Deposit Guarantee Fund as at 31 December
2011, and of the results of itsoperations, changes in Own resources and its cash
flows for the year then ended, in accordance withthe accounting principles adopted
in the Fund’s Chart of Accounts (Note 2 to the Financial Statements).
ERNST & YOUNG AUDIT & ASSOCIADOS - SROC, S.A.
Sociedade de Revisores Oficiais de Contas, n.º 178
Represented by:
Ana Rosa Ribeiro Salcedas Monteiro Pinto (ROC n.º1230)
ANNEX
V
LIST OF CREDIT INSTITUTIONS THAT WERE MEMBERS
OF THE FUND*
V
SAVINGS BANKS
Caixa Geral de Depósitos, S. A.
Caixa Económica Montepio Geral
Banco ActivoBank (Portugal), S. A.
Caixa Económica da Associação de Socorros Mútuos
Banco Bilbao Vizcaya Argentaria (Portugal), S. A.
de Empregados no Comércio de Lisboa
Banco BAI Europa, S. A.
Caixa Económica da Misericórdia de Angra do Heroísmo
Banco BIC Português, S. A.
Caixa Económica do Porto
Banco BPI, S. A.
Caixa Económica Social
Banco Comercial Português, S. A.
Banco Credibom, S. A.
Banco Efisa, S. A.
Banco Espírito Santo, S. A.
MUTUAL AGRICULTURAL CREDIT BANKS**
Banco Espírito Santo dos Açores, S. A.
Caixa de Crédito Agrícola Mútuo do Bombarral, CRL
Banco Espírito Santo de Investimento, S. A.
Caixa de Crédito Agrícola Mútuo da Chamusca, CRL
Banque Privée Espírito Santo, S. A. (branch)
Caixa de Crédito Agrícola Mútuo de Leiria, CRL
Banco Finantia, S. A.
Caixa de Crédito Agrícola Mútuo de Mafra, CRL
Banco Invest, S. A.
Caixa de Crédito Agrícola Mútuo de Torres Vedras, CRL
Banco ltaú Europa, S. A.
Banco de Investimento Imobiliário, S. A.
Banco de Investimento Global, S. A.
Banco L. J. Carregosa, S. A.
Banco Madesant – Sociedade Unipessoal, S. A.
Banco Mais, S. A.
Banco BNP Paribas Personal Finance, S. A.
Banco Popular Portugal, S. A.
Banco Português de Gestão, S. A.
Banco Português de Investimento, S. A.
Banco Primus, S. A.
Banco Privado Atlântico – Europa, S. A.
Banco Rural Europa, S. A.
Banco Santander Consumer Portugal, S. A.
Banco Santander Totta, S. A.
Banif – Banco de Investimento, S. A.
Banif - Banco Internacional do Funchal, S. A.
Best – Banco Electrónico de Serviço Total, S. A.
BPN - Banco Português de Negócios, S. A.
Caixa – Banco de Investimento, S. A.
Finibanco, S. A.
Hyposwiss Privat Bank (Genève), S. A. (branch)
* Situation as at 31 December 2011, according to the special registration with Banco de Portugal, as referred to in Article 65 of the
RGICSF, approved by Decree-Law No 298/92 of 31 December.
** Not belonging to the Integrated Mutual Agricultural Credit Scheme.
Note: In 2011 the following institutions ceased to be members of the Fund: (1) the branch of AS Privat Bank in Portugal, which was a
member of the Fund in order to benefit from the so-called “topping-up scheme”; and (2) Deutsche Bank (Portugal), S.A.
65
Annex
BANKS

relatorio 2013_2_13.indd - Fundo de Garantia de Depósitos

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