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Date	02/07/1999
Companies	MUNDIAL CONFIANCA - BANCO SANTANDER CENTRAL HISPANO -
Subject	BSCH negotiations with Portuguese government stalled.

	Following the threat of intervention by the EU Commission talks were initiated concerning the permission for BSCH, Spain's largest Bank to acquire 40% of Mundial Confianca, a Portuguese insurer with controlling interests in three Portuguese Banks. The deal was blocked earlier by the Portuguese Central Bank. It is understood little progress has been made in these talks. The Portuguese official position was that the deal had been made illegally as approval had not been gained in advance for the purchase of a 'significant share' of a Portuguese Insurer. A 'significant share' is not precisely defined but is considered to be from around 10%. Observers considered the real reason, was to keep the banking sector under Portuguese ownership. Discrimination against organisation of other EU member states is of course prohibited. Central Banks are allowed to intervene only for 'prudential' reasons. Pressure was added from Spain with Rodrigo Rato, Finance Minister, publicly calling for EU commission intervention if a solution was 'not found fast'. Up until last night the Spanish Government had worked behind the scenes only on the matter. * related items on database *
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