Banco Montepio CEO: 'Grants Should Be on the Table' for Storm Recovery

Portugal - Ekhbary News Agency

Banco Montepio CEO: 'Grants Should Be on the Table' for Storm Recovery

In the wake of significant damage caused by severe weather events, Pedro Leitão, the CEO of Banco Montepio, has underscored the importance of keeping non-reimbursable aid, commonly referred to as grants, as a viable option for recovery efforts. While Leitão expressed confidence that the majority of damage cases stemming from the adverse weather conditions can be addressed through already announced measures and those in the pipeline, he firmly believes that the possibility of offering direct grants should not be dismissed.

In an interview with "Negócios" and "Antena 1," Leitão highlighted that the Portuguese Recovery and Resilience Plan (PRR), as outlined by Luís Montenegro, is expected to encompass additional support mechanisms. Based on available data, he noted that the most severe cases of destruction are likely to constitute a minority of the overall impact. When questioned about the adequacy of announced credit lines for businesses facing devastation, Leitão reiterated that such extreme scenarios would be exceptional. "Each case is unique. For extreme devastation, there are instruments, subsidies, and the Portuguese Development Bank (BPF) has support mechanisms that can be considered. I believe this won't be the prevailing trend. A case of devastation is incredibly complex for entrepreneurs and families, but it doesn't appear to be the common scenario," the banker stated.

However, Leitão maintains that the prospect of direct aid should not be excluded from the ongoing discussions. "I think it's important that it's on the table and that these options exist. It's crucial that they have concrete eligibility criteria, that they are easily translatable into reality, serving as a complementary instrument. I am convinced, with the data I have, that this will not constitute the largest portion of the support needed for recovery," he added.

Regarding what he considers "normal and desirable" support, the bank's CEO emphasized the banking sector's role as a "transmission vehicle to the economy." He acknowledged the government's initiative to involve financial institutions in responding to the weather-related impacts, noting the swiftness of the response. "There is also a comprehensive and rapid response from the Portuguese Development Bank (BPF), which has made a set of credit lines available. In parallel, a group of institutions, including ourselves, provided immediate support to clients and collaborators," Leitão mentioned, with the full interview scheduled for publication on Monday.

Currently, Leitão observes that demand is strong, but it leans more towards seeking information rather than actively contracting credit from the two lines launched by the BPF – one for immediate treasury needs and another for reconstruction. "At this stage, the flow is small. There's a lot of information being sought, both regarding the BPF-backed lines and payment moratoriums. However, actual uptake is still limited. A broad support network is beginning to be activated," he advanced. Leitão also praised the BPF's agility in this process. "The BPF has shown evident transformation and a significantly improved level of service. Banco Montepio has also demonstrated proactivity, allowing us to achieve a market presence among businesses that is considerably greater than our natural share," he concluded.

Concerning mortgage payment moratoriums, Pedro Leitão pointed out that the total outstanding mortgage stock in the country stands at approximately 100 billion euros, with affected areas potentially accounting for 10% to 15% of this value. He cautioned, however, that "not all homes were affected."

Ekhbary News Agency