It was the first match between carlos costa Y mario rye after the latter assumed the position of Minister of Finance, at the end of 2015. The relationship between the two was no longer good, since the controversy with the election for the department of economic studies, but the issue of dividends paid to the State was the first big scare: the central bank racked up big profits and, under budgetary pressure, Minister Centeno wanted more dividends. Now, with the rapid change in ECB policy, profits will decrease or even turn into losses – It is already happening in some countries. Thus, Fernando Medina will receive less from Centeno-governor than Centeno-minister wanted to receive.
In mid-December, Mário Centeno ruled out the risk that Banco de Portugal had losses already in 2022, something that will happen to several banks in the euro zone. But he was less exhaustive about the following years and limited himself to saying that “this pressure will continue for a few more years”, which means that the forecast that exists at the moment is “a very substantial reduction of what the dividends of Banco de Portugal may be in the coming years“. Contacted by the Observer, an official source at the financial watchdog declined to comment further.
What is at stake is that during the era of negative interest rates, in recent years, central banks began to charge interest to commercial banks when they “parked” their excess liquidity there, that is, it became a recipe for the Bank of Portugal what in normal times would be an expense. But now it is back to normal: the central banks of the Eurosystem not only have they stopped charging interest but they are already paying the (commercial) banks for these deposits. The so-called deposit rate is currently at 2%, but is likely to rise to 2.5% at the ECB meeting on Thursday.
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Source: Observadora
