Speech by Miguel Tiago, Member of Parliament and Member of the PCP’s Lisbon Regional Leadership, XXth Congresss of the PCP

On the financial sector

On the financial sector

Comrades

In Portugal, the banks, once privatized, have distributed billions of Euros in dividends. Between 2000 and 2014 alone, banks have distributed € 8.5 billion in dividends to shareholders. However, net results have been steadily falling over the past few years, particularly since 2009, and impairment losses have reached values above 16 billion Euros. The impact of these losses drove banks operating in Portugal into bankruptcy due to the lack of regulatory capital. Out of a total of about 22 billion capital missing (up to now) in the financial system, about 16 billion have been withdrawn from public resources. The remaining 6 billion were obtained in part by credits guaranteed by the State and granted to Portuguese banks or by circular credits to shareholders, as was verified in Portugal in several banks, some of them targets of a parliamentary inquiry committee.

Over the last decades, the political power has fueled the growth of a banking business, contributing to the flourishing of large economic and financial groups in Portugal that have recovered the monopolistic tradition of past Portugal. Instead of complying with the law and the constitution, the successive Governments, PS, PSD and CDS, have affronted it by contributing to the consolidation of monopolies and to the concentration of financial power. The case of the Banif, handed over to Santander Totta, is a clear example of the state intervention to clear a bank's debt and hand it over to another even larger bank. In other words, gradually, the banking institutions are undergoing a process of agglutination, contributing to the creation of financial monsters that constitute an increasingly significant risk to the people´s interests.

The banking system in Portugal, that has always been deeply decapitalized, grew in the shadow of the political power and the choices of successive governments and managed the credit in accordance with the objectives of large shareholders. At the same time as it has conditioned the flow and direction of the credit, the banking system jeopardized the savings of millions of workers and promoted a dividend distribution policy that ignored the risks of credit. That is: in Portugal and in other countries, the story is the same: the Bank's large private shareholder uses deposits - the workers' savings - to give credit to large economic groups of which it is also a shareholder. At the same time, the shareholder receives the profits generated by the banking institution. When the shareholder does not pay the debt contracted with the bank, it is the workers' deposits that are at risk. So far, governments have diverted public resources to safeguard those deposits. This option has concrete costs in public services and rights. Take the case of BES: it was not possible to save BES without billions being diverted from public resources, implying cuts in social expenses and in the basic functioning of Education, Health, Culture, Public Safety, Justice , etc ... In other words, saving the BES implied a violation of the constitution of the Portuguese Republic. This is also true in what concerned the BPN, the BPP, the Banif and the BCP. It is true for all private banks. The current situation of the Novo Banco (New Bank), if its delivery to a private group is effectively achieved, presents itself as a new process of cleaning the banking system to remain in the hands of the same.

The private banking system, therefore, represents an unacceptable risk in all dimensions. It is a risk, because it determines where the credit is directed to according to the exclusive interest of the shareholder, regardless of national needs and the needs of the economy.

A risk, because the policy of distribution of dividends to private shareholders is directed towards the immediate return of share capital plus profits that may not match the institution's results. That's exactly what happened in Portugal. Thousands of Euros of dividends, which were actually being withdrawn from the banking capital and not from results of its activity, have been distributed.

A risk because banking supervision is a hoax, a construction of the political power and financial power to reassure the masses. The constitution of the Banking Union corresponds to a new phase of this construction, this illusion.

It is in the public control of the banking system that lies the key to solving the main problems of the financial system.
The public control of banking system is a necessary but not sufficient condition, as we can see in what concerns the Caixa Geral de Depósitos. It is, however, a political necessity and cannot be separated from a strategy of building a patriotic and left-wing alternative policy that will regain national sovereignty and liberate democracy from the web sof large monopoly capital. And this which can only be achieved by renegotiating the debt and the recovery of our monetary sovereignty.

To control the banking system, renegotiate the debt and prepare the exit of the euro are the objectives to meet and accomplish the values of April. Because only with the values of April will Portugal have a future.

Long live the PCP!

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  • Intervenção
  • XX Congresso do PCP
Intervenção
XX Congresso do PCP

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