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| Computer Translations Übersetzungen Traductions Traduzioni
Traducciones Traduções Oversettelse
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| Date |
27/09/1999 |
| Companies
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MUNDIAL CONFIANCA - BANCO SANTANDER CENTRAL HISPANO - |
| Subject
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Portugal says BSCH / Mundial deal blocked on prudential grounds |
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The Portuguese government has responded to the European Commission stating that its veto remains in place over the deal. The news was contained in a letter from the Portuguese Finance ministry to the commission dated on the 24th, the last day the government had to respond. It uses as support, the Portuguese Central Bank review that states there are prudential grounds for rejecting the plan. The Central Bank finding is based on 'unclear management control' rather than the usual type of prudential grounds. The argument being that the four banks owned by Mundial Confianca would have direction form their other shareholders and Mundial, which in turn would be 40% owned by Spanish BSCH.
Antonio Champalimaud, the Portuguese Billionaire who is majority owner of Mundial has already responded with an offer to sell 100%, rather than the proposed 40% to BSCH in order to reduce this supposed confusion. As Mundial has had no proper management for some months due to a further Portuguese ruling which reduced Champalimaud's voting rights down to 10% he also said that he would under protest also sell to a Portuguese offer.
The Portuguese argument which would make most of the continental European banks fail the test of prudential management is almost certain to be rejected by the Commission. In which case it will refer the matter to the European Court of Justice. The matter has become a major test case for the EU. The EU rules state that the only reason a state may intervene in the merger & acquisitions of banks within member states is on prudential grounds. Many states are unhappy with this, wanting to control banking within their territory. Previous suspected nationalistic interventions have contained enough of a surface veneer relating to prudential grounds to escape investigation.
If the Commission refers the case, it will be the first referral to the ECJ of a merger case. The German government is appealing a Commission ruling relating to Westdeutsche Landesbank to the ECJ. The German case relates to an arrangement with the local state which the Commission has designated an illegal subsidy and has demanded repayment by the bank. Especially controversial in the German case is the repayment calculation is based upon the additional earnings the state could have gained if invested in the international money markets.
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