SPECIALISED COMPANIES OF THE BCP GROUP
INSURANCE
Market deregulation, the introduction of the euro, the pressure
of the capital markets and technological developments have all
caused profound change to the structure of the European
insurance market, bringing about its swift consolidation. It was
against this background that the decision was taken in July 2000
to integrate the business of Seguros e Pensões and of the
banking and insurance areas of Achmea into Eureko BV.
Following the increase of its share capital, BCP held a 17%
stake in this company, through the transfer of shares
corresponding to its 50.1% stake in Seguros e Pensões. This
stake was later to be increased to 24.8% owing to the transmission
of the direct economic interests held by BCP in Achmea Bank
Holding, Interamerican Hellenic Life Insurance Company and
Intertrust Mutual Fund Management. The intention was to
create a cohesive initial platform designed not only to bring
about other partners interest to join and to continue to respond
efficiently to the competitive demands of a European market
undergoing growing integration, but also to aspire to stock
market listing in the medium term, as a pan-European entity
based on a management model focused on and taking full
advantage of the leading position held by each partner in its own
domestic market.
SEGUROS E PENSÕES
Seguros e Pensões, whose management continues to be in the
hands of BCP within the scope of Eureko, includes a large
number of brands that operate on the domestic market in
accordance with distinct, complementary strategies. It covers
the entire market through a strategy involving multiple
distribution channels based on the country’s biggest financial
product distribution network. The inclusion of Império into
Seguros e Pensões during 2000, allowed the latter to significantly
strengthen its leading position in the various business segments.
At the end of the year its market share stood at 29% of the
insurance market as a whole, or 33% of the Life Assurance
segment, 24% of the Non-life segment and about 25% of
pension fund management.
The most remarkable events in the life of Seguros e Pensões
during 2000 were the inclusion of Império into the Seguros e
Pensões Group and the agreement to integrate Seguros e Pensões and the insurance business of Achmea into Eureko, with a
view to putting the latter among the leading European insurance
groups. The various brands continued to focus on the sustained
growth of turnover and on the improvement of productivity and
efficiency. At operating level, continuity was given to the
development and consolidation of the claims’ management
platforms – Médis Saude, Médis Acidentes and Auto Gere – the
aim being to secure synergies and to cut costs, with a consequent
improvement of the underwriting profitability of the business.
The integration of Império into Seguros e Pensões concentrated
within a single insurance group nearly 30% of the domestic
market, which contributed to the consolidation of the Portuguese
insurance sector, in keeping with the trend seen at European
level in recent years. For Seguros e Pensões, this operation was
a unique opportunity to perfect its organisational model, taking
the fullest possible advantage of the synergies of the operating
structures and of the development of new business opportunities,
38
while improving the efficiency and quality of the service
provided and increasing the return on capital invested.
The restructuring was completed in 2000 and its main aim was
to suit the organisational structure to the present size of the
Group so as to ensure, on the one hand, greater specialisation in
the activity directed at the distribution channels, improving the
support provided and the effectiveness in its vitalisation and, on
the other, to maximise the synergies and economies of scale of
the operational platforms, increasing their turnover and
improving their efficiency. This was to come about through
their proper restructuring and through the adoption of best
practices, not only in dealing with claims but also in production
and underwriting criteria. There was also the fact that the
dimension and know-how allowed an adequate readjustment of
the pricing and added response capacity.
The new organisational structure at Seguros e Pensões focuses
the business of the traditional channels – agents, intermediaries
and brokers – on a single insurance company that resulted from
the merge of the Império and Bonança insurance companies.
Business sourced via the banking channel was centred on
Ocidental Seguros and on Ocidental Vida, which also took over
the business of Atlântico Seguros and Atlântico Vida. The direct
channel – telephone and Internet – was centred on Seguro
Directo. At the same time, a segmented business area was set up
– Império Comércio e Indústria – which deals with all the
business of the larger companies and constitutes a potential
embryo of a new insurer specialised in this field. Médis and
Auto Gere were kept on as operational platforms supporting the
various brands, while S&P RE stood as the Group’s reinsurance
platform. Pensõesgere and Corretorgest manage the pension
funds and independent insurance brokerage businesses
respectively, both of them leaders of their own sectors.
In a macroeconomic surrounding marked by a slowdown of
economic activity, mainly due to less robust private consumption
– reflecting worsening consumer confidence caused by higher
interest and inflation rates – despite the good performance of
investment, construction and public works, exports and the
continuation of low unemployment, the overall performance of
the insurance sector, which grew 5.6%, was considerably affected
by the slowdown seen in Life Assurance. Here, there business
was practically unchanged from the level seen in the previous
year, while in Non-life Insurance the overall performance was
very good, with an annual increase of production of 11.8%.
The adjustment to the Workmen’s Compensation tariffs – as a
result of changes to legislation – and the continued growth of
Motor Insurance premiums at the level seen the previous year,
despite the falling sales of new cars, made a powerful contribution
to the growth seen in Non-life Insurance during 2000. The poor
performance of the financial markets allied to the higher interest
rates on deposits and other low-risk financial applications had
a negative effect on the overall growth of Life Assurance.
Seguros e Pensões significantly increased its position as the
largest Portuguese insurer in terms of premiums during 2000,
with an overall market share of 29.1%. Insurance production
rose 11.5% over the previous year, despite the fact that the
number of new contracts fell slightly during the year, to stand
at 852,000. This reflected the positive performance of the
distribution channels in general – 410,000 new contracts through
the banking channel, 425,000 through the traditional channels
and 17,000 through the direct channel (telephone and Internet).
as a result of the integration into Eureko, with Seguros e
Pensões moving on to another level of cost synergies and of
technological innovation.
Highlights of Seguros e Pensões
Seguro Directo, the first company to operate on the domestic
market solely via the direct channel (sales over the phone and
via the Internet) continued its efforts designed to achieve
critical mass. At the end of the year it had a portfolio of about
60,000 contracts, achieving a rate of sales of approximately
1,500 contracts a month during 2000, about 8% of which
sourced via the Internet.
The volume of premiums of the Life Assurance companies of
Seguros e Pensões rose 11.2% compared to the previous year to
stand at PTE 254.3 billion at the end of 2000, providing a market
share of 33.5%.
The premiums of the Seguros e Pensões Non-life insurers
amounted to PTE 157.5 billion, an increase of 12.0% over the
previous year. More significant growth was seen in Workmen’s
Compensation (36.9%), Health (12.3%), Motor (8.5%) and
householders’ comprehensive cover (14.2%). With a portfolio
that is diversified and well-balanced in the light of the market,
Seguros e Pensões consolidated its leadership of the market in
this segment, with a market share of 24%.
In the pension fund management business the acquisition of
Mello Activos Financeiros, SGFP, S.A., by Pensõesgere was to
further increase its leading position on the market. Leadership
of the independent brokerage market was also enhanced, here
through the acquisition of MC Mediação–Sociedade Mediadora
de Seguros, S.A., by Corretoresgest, which improved its strategic
position and became the leader among the larger brokerage
groups operating on the domestic market.
Within the scope of international business, Companhia de
Seguros Macau (Life and Non-life) continued to be quite
successful in implementing a bancassurance strategy in cooperation with BCM Asia. In turn, SIM – Seguradora Internacional de Moçambique, which operates in Mozambique in
conjunction with Banco Internacional de Moçambique (BIM),
had a portfolio of some 6,900 policies, providing an average
penetration rate of some 37% of the BIM customer base.
With Total assets of PTE 1,496 billion and Shareholders’ equity
of PTE 72 billion, Seguros e Pensões generated a consolidated
Underwriting profit (before administrative costs) in the sum of
PTE 61.8 billion, returning Net income of PTE 17.1 billion
attributable to Seguros e Pensões.
During 2001, the main strategic vectors of the business of
Seguros e Pensões will be focused on: growth of turnover and
on the consequent increase of its leadership of the Portuguese
insurance industry; improved underwriting returns, driven both
by the consolidation of its operational platforms and by taking
full advantage of the synergies and economies of scale resulting
from the integration of Império and by suiting its reinsurance
policies to the present size of the Group; and control of operating
costs through the optimisation and proper allocation of resources
to the various functions. An active role is also expected to be
played in the construction of the European operational platforms
1999
Pro forma
∆%
1,495,978
71,951
447,602
61,782
1,276,089
38,813
396,226
66,515
17.2%
85.4%
13.0%
-7.1%
3,418
17,080
11,175
11,448
-69.4%
49.2%
24.0%
33.5%
29.1%
12.9%
2,910
24.0%
30.4%
27.6%
7.8%
3,207
-9.3%
2000
Total Assets
Net interest income
Premium Income
Technical margin
Technical margin net
of operating costs
Net income
Market share
Non-life
Life
Total
ROE
Number of employees
(PTE Million)
INVESTMENT BANKING
BCP INVESTIMENTO
BCP Investimento (BCPI) consolidated its leadership in several
areas of the investment banking business, particularly in the
capital markets and project finance area. Emphasis is given to
the following: participation in the major capital market operations
both in the equity segment and in the debt market; involvement
in international operations, once again playing the role of leader
in the second pan-European Deutsche Telekom retail offering;
provision of consultancy services to several entities, institutions
and companies; ongoing development of innovative products
for the various segments of the BCP Group; and increased
product placement capacity through the distribution networks.
In the wake of the merger of Banco Mello, Banco Português do
Atlântico and Banco Pinto & Sotto Mayor into Banco Comercial Português the investment banking arm was restructured
with a view to transforming BCPA-Banco de Investimento into
an institution whose purpose is to carry on the investment
banking business of the BCP Group, a decision being taken to
change the company’s name to BCP Investimento – Banco
Comercial Português de Investimento, S.A.. A new corporate
image was adopted, complete with a new logo, symbol and
signature, to reveal more clearly to the market the new dynamics,
the quality of the service of excellence and the financial solidity
provided by being a part of the BCP Group.
Recognition of the excellent role played by BCP Investimento
on the capital markets led to the Award for Excellence being
granted to the Bank by the Euromoney magazine as Portugal’s
Best Domestic Equities Firm in 1999.
On the primary equity market, BCP Investimento led the
organisation and setting-up of the overall offering of Deutsche
Telekom shares in an operation that constituted an historic
landmark on the international equity markets since it was the
first overall public offering to be carried out at the same time
39
in 15 European countries, the United States, Canada and Japan.
The Bank was also co-leader of the Sonae.com and NovaBase
IPOs. In the privatisation field, BCP Investimento carried out
the economic and financial valuation of the EDP Group for the
purpose of the fourth stage of the privatisation of EDP-Electricidade de Portugal, S.A., having been appointed overall coordinator of the organisation and setting-up of this operation.
BCP Investimento was involved in several financing and debt
issue operations. In the field of commercial paper programme
issues, BCPI was involved in the following: joint leadership of
two programmes for Jerónimo Martins – Gestão de Empresa de
Retalho, SGPS; the organisation and setting-up of programmes
for EDP in the sum of EUR 250 million; and the organisation
and setting-up of a grouped commercial paper programme for
the Efacec Group. In the bond segment the emphasis is on the
involvement in seventeen international bond loans totalling
EUR 172 million. Outstanding here were: involvement as
senior-co leader of the mortgage loan securitisation operation
involving mortgage loans sourced by the Achmea Group; joint
leadership of a bond loan in the sum of EUR 15 million for
Credifin; and the organisation and setting-up of two Credit
Linked Notes issues indexed to the performance of the bond
issues of the Federative Republic of Brazil on the international
markets, carried out under the Banco Comercial Português
Euro Medium Term Notes programme. Also underscored is the
involvement of BCPI in the syndication of operations on the
international market, including: leadership of a medium- and
long-term syndicated loan to the Nutrinveste Group within the
scope of the Triunfo industrial investment project; involvement
as co-lead manager of an international issue of preference
shares for Depfa; and the joint leadership, organisation
and setting-up of a stand-by credit facility in the sum of
EUR 150 million of the Public Credit Management Institute.
BCP Investimento took part in operations to prepare information
memoranda and to finance flagship projects at home and
abroad, namely: the organisation and setting-up of a bond loan
issued by STCP-Sociedade de Transportes Colectivos do Porto;
leadership jointly with a foreign financial institution of the
schuldschein loan in the sum of EUR 250 million for REFER;
a role as insurance bank in the negotiations that gave rise to the
refinancing of the project finance for Lusoponte – Concessionária para a Travessia do Tejo, S.A., having also acted as
syndication bookrunner in the international syndication of this
operation; and a role as facility agent and intercreditor agent,
with a participation of PTE 4.7 billion, in the international
syndication of the financing extended to Scutvias - Empresa
Concessionária das Auto-estradas da Beira Interior. In the
project and corporate finance areas, BCPI took part in the
extending credit facilities to: the concessionaire of the Madeira
Autonomous Region Highway Concession; the concessionaire
of the Costa da Prata Highway Concession – Lusoscut Costa de
Prata, in which BCPI is a member of the financing syndicate as
arranger, with a joint participation with BCP amounting to
42.6% of the overall total of the senior debt in the sum of around
PTE 85 billion; the financing of the construction and operation
of the CUF Descobertas Hospital, in which BCPI acted as
consultant to José de Mello Saúde, SGPS, and as arranger in the
financing syndicate. BCPI also took part in organising and
setting up the financing of the Secil Group in the acquisition of
the Tunisian cement company Société des Ciments de Gabés.
40
In the field of strategic consultancy, economic and financial
advisory services, and specialised financial services, the various
events involving BCPI included: financial consultancy provided
to the Inapa Group within the scope of the restructuring of the
national pulp and paper industry, in respect both of the sale of
its 72% holding in Papéis Inapa and in the organisation and
setting-up of the financing of the acquisition of Papier Union,
Germany’s third largest paper distributor; financial consultancy,
in partnership with ING Barings, to the Metro do Arco Ribeirinho
Group, within the scope of the international call for tenders for
the award of the Metro do Sul do Tejo Concession; advisory
services provided to Brisa in the valuation and negotiations
leading to the acquisition of a relevant holding in Companhia de
Concessões Rodoviárias (CCR), which holds the main highway
concessions in Brazil: consultancy in the MBO of 100% of the
share capital of Singer Europa SGPS, S.A.; and, as adviser,
involvement in the final adjudication of the Cascais municipal
water and sewage distribution system concession to the jointventure headed by IPE-ADP and by Somague Ambiente.
During 2000, BCPI structured and promoted the launch of
several products placed through the BCP Group’s distribution
networks. Of these, attention is drawn to: the issue of capital
guaranteed bonds indexed to the equity markets – “Capital
Guaranteed Telecoms 2005”, “Capital Guaranteed Mobile
Telecommunications 2005”, “Capital Guaranteed Valor Telecom
2005”, “BCP SFI Capital Guaranteed Telecoms 2005”, and
“Capital Guaranteed Media 2005”; the launch of five bond
issues of structured products indexed to the equity market, of
which one was indexed to North American companies in the
media sector – “Capital Guaranteed Dow Jones Media 2005” –
and the other four in partnership with the Private Banking
network, two of which are indexed to the index of blue chip
companies in the Euro Zone – “Capital Guaranteed
EuroSTOXX50”; and the structuring of “interest-rate” products,
including “Increasing Capital Bonds” and “Increasing Interest
Bonds”, in addition to an “FX Linked” product in the sum of
EUR 67 million.
BCP Dealer – Sociedade Financeira de Corretagem (formerly
Cisf Dealer) made its mark as the dealer of the BCP Group
following the integration of Mello Valores in October 2000.
Notwithstanding the volatility that characterised the overall
performance of the Portuguese stock market, BCP Dealer was
very active during the year, ranking first among the dealers
acting on the domestic market. This was helped by the significant
volume of securities traded within the scope of the acquisitions
made by the BCP group, its involvement in the EDP Electricidade
de Portugal offering, in which it acted as settlement and paying
agent, as well as in the transactions of Brisa, the Sonae Group
and PT Multimedia securities. In the retail area the networks of
the BCP Group performed excellently, and direct customers
also proved very dynamic, insofar as both attracting new
customers and the increasing turnover by existing customers is
concerned. Customers showed an increasing appetite for
investment in foreign securities listed on other bourses, fully
justifying the focus of BCP Dealer on the provision of excellent
service in this business segment.
During 2000 Cisf Risco concentrated on the overhaul of its
portfolio of holdings, ahead of their sale under the best possible
conditions, and on the financial and management support to its
subsidiaries. In this connection, emphasis is given to: the
conclusion of the financial restructuring of David Ferreira da
Silva, S.A., in the wake of which 55% of its share capital was
sold; and the sale of the holdings in Sonafi – Sociedade Nacional
de Fundição Injectada, S.A., Cidade Expresso–Serviços de
Distribuição, S.A., and Shopping Direct, Comércio Electrónico,
S.A.. At the year-end Cisf Risco had a stake in a total of eleven
undertakings.
BIM Investimento carried on its investment banking and
provision of financial services business directed especially at
the analysis and setting up of medium- and long-term credit
operations. It has come to be of crucial importance in this area
in the provision of specialised support to the business of BIM,
in addition to the consultancy it provides in the recovery and
restructuring of the loan portfolio. The major events during the
year under review included: financial consultancy, modelling
and preparation of the information memorandum to attract
capital to the Nacala and Malawi Development Corridor
Companies; advisory services in the financial restructuring of
the JFS Group, both in the negotiation of the rescheduling of its
bank debt and in the preparation of information memorandums;
financial advice to the Beleluane Industrial Park; organising
and setting up a banking syndicate for a syndicated loan to be
granted to LAM, in addition to the valuation of its subsidiaries
(the Polana and Cardoso Hotels); and the organisation, setting
up of the issue and application for admission to listing of a bond
loan – BIM 2000 Bonds.
The consolidated Total assets of BCP Investimento stood at
PTE 425.4 billion as at December 31, 2000, an increase of
49.9% over the figure seen at the end of the previous year. BCP
Investimento returned consolidated Net income in the sum of
PTE 5.2 billion, 26.1% more than the previous year, helped by
the very good performance of Other income, which accounted
for about 90% of the total income generated during the year now
ended.
Following the conclusion, set for 2001, of the restructuring
process triggered by the merge of Banco Mello de Investimentos,
BCP Investimento is to promote the strengthening of its identity
and institutional stance in the marketplace and will make every
effort to preserve its leadership in terms of capacity and
technological innovation, as a means to improving its service of
excellence and of enhancing its relations with its customers,
with a view to the full satisfaction of their financial requirements.
Highlights of BCP Investimento
Total Assets
Loans and advances
Net interest margin
Other income (net)
Operating costs
Net income
ROE
ROA
Number of employees
(PTE Million)
2000
1999
425,395
74,811
1,193
10,398
3,424
5,166
22.9%
1.4%
244
283,838
66,098
1,773
7,524
2,707
4,097
19.3%
1.2%
139
∆%
49.9%
13.2%
-32.7%
38.2%
26.5%
26.1%
75.5%
SPECIALISED CREDIT
LEASEFACTOR
Following a period of sharp growth at an average annual rate of
approximately 23% over the past five years, the overall growth
of the leasing industry slowed somewhat in 2000. Equipment
leasing was up by over 20% while the growth of real-estate
leasing stood at about 12%. This was undoubtedly the result of
the increase seen in other vehicle and equipment financing
instruments that took advantage of the better legal framework.
Nevertheless, leasing continues to be preferred by economic
agents to finance investment, especially as far as small and
medium enterprises and the liberal professions are concerned,
accounting as it does for about 10% of the bank loans extended
to non-financial companies.
Taking advantage of the good state of the economy during the
greater part of the year and of the satisfactory level of nonperformance, the sector was able to continue to implement
aggressive pricing strategies. This narrowed the margins to
such an extent that it has left the sector somewhat vulnerable to
any worsening of the economy.
The restructuring of the specialised credit areas of the BCP Group
in the wake of the merger of Banco Português do Atlântico and
Banco Mello into BCP was reflected in Leasefactor’s
organisational structure. In the leasing area, attention is drawn to:
the change of the name of Leasing Atlântico to BCP Leasing; the
integration of Mello Leasing into the Leasefactor Group and, in
a second stage, its merge, together with Comercial Leasing and
Nacional Leasing into BCP Leasing, now the Group’s only brand
in the leasing business. BCP Leasing now handles all leasing
operations, both those sourced via the banking networks of the
BCP Group and those attracted directly.
Following the concentration of all leasing business under BCP
Leasing, the commercial area of the company was restructured,
the aim being to provide effective articulation and identity
between the banking and non-banking distribution networks
and the company’s commercial teams. On the other hand, and
as seen at the other BCP distribution networks, all transactions
sourced by the SottoMayor network have also been channelled
to BCP Leasing since May 2000.
Furthering the internationalisation of the BCP Group’s business,
BIM Leasing was incorporated in Mozambique in March 2000.
Its share capital in meticais is equal to USD 2 million, of which
Leasefactor subscribed to and paid up 25%, in addition to
providing the specialised know-how and the skilled human
resources essential to the development of this project and to the
increase of the competitiveness of the BIM Group.
Total production of BCP Leasing, aggregating the business of
the four companies – Comercial Leasing, Leasing Atlântico,
Nacional Leasing and Mello Leasing – amounted to 23,268
contracts in the sum of PTE 221 billion, of which 21,601
contracts valued at PTE 160 billion involved equipment leasing.
The remaining 1,667 contacts valued at PTE 61 billion involved
real-estate leasing. This continued to provide the BCP Group
with clear leadership of the leasing industry in Portugal, with a
market share of 29% in 2000.
41
The promotion of cross-selling was further increased and
emphasis is given to the campaigns and to the involvement in
the specific measures introduced by the banking networks,
particularly the NovaRede Summer and Winter Olympic Games
campaigns. At the operational level, the year saw the launch of
“LEASEAUTO Expresso” designed to increase the business in
the vehicle segment. Its aim being to speed up the credit
decision process and to simplify the administrative procedures
inherent in vehicle leasing.
In the factoring sector, reorganisation of the specialised
companies went ahead in the wake of the concentration seen
among the Portuguese financial groups, bringing the factoring
companies more into line with the banking groups of which they
are a part. As far as the tax framework is concerned, the new
Stamp Duty Code was enacted in March 2000 and had a
negative effect on the industry in that stamp duty is now levied
on advances within the scope of factoring contracts. The industry
turnover in terms of credits taken continued to grow apace
during 2000, with an overall increase of around 18% compared
to the previous year. Credit extended by the industry amounted
to PTE 245 billion at the end of 2000, 20% higher than the figure
as at December 31, 1999.
Within the scope of the reorganisation of Leasefactor, which
involved the merger of Factoring Atlântico into Nacional
Factoring and the change of name to BCPAtlântico Factoring
and then to BCP Factoring, the Group’s service of excellence
was also redesigned. Its business is now centred on a single
brand – BCP Factoring – transverse to all the banking networks.
This meant the reorganisation of the Company’s commercial
teams to suit the new structure to the organisation of the banking
distribution networks. During 2000 the BCP Group maintained
its leadership position in the factoring sector, with credits taken
standing at PTE 490 billion, providing a market share of some
28%.
During 2000, BCP Factoring introduced several measures
designed to foster cross-selling by the banking networks, and
attention is called to the following promotional campaigns:
“Cash Sales” through the Individuals & Businesses network;
and the “Easy Factoring and Traditional Factoring” campaign
undertaken at the SottoMayor and Atlântico networks.
Leasefactor’s overall business was marked by leasing production
totalling PTE 221 billion and by invoicing taken in the sum
of PTE 490 billion. The consolidated loan portfolio stood at
PTE 499 billion as at December 31, 2000, of which
PTE 419 billion were in respect of leasing and PTE 80 billion
in respect of factoring. Consolidated Net interest income was
down by 4.2% as a result of the fact that the increase of the loan
portfolio was insufficient to offset the 80 b.p. reduction of the
net interest margin. Net income was returned in the sum of
PTE 2.2 billion, 4.1% up over the previous year. Determinant to
this was the reduction of provisioning requirements as a result
of the good performance on non-performing loans.
During 2001 the objectives of the companies making up the
Leasefactor Group include consolidation of the restructuring
begun in 2000, improved customer service with a view to
attracting new customers and to ensuring the loyalty of the
42
existing ones, increased profitability and consolidation of the
leadership of the domestic leasing and factoring sectors.
Highlights of Leasefactor
Total Assets
Loans and advances
Leasing
Loans and advances
New contracts
Factoring
Invoices accepted
Loans and advances
Net interest margin
Operating costs
Net income
ROE
ROA
Number of employees
∆%
2000
1999
514,145
498,675
394,473
377,646
30.3%
32.0%
418,774
220,679
302,218
171,267
38.6%
28.9%
490,217
79,901
8,591
4,922
2,203
16.7%
0.5%
318
496,022
75,428
8,969
4,079
2,115
15.6%
0.6%
268
-1.2%
5.9%
-4.2%
20.7%
4.1%
18.7%
(PTE Million)
CRÉDIBANCO
The strategic guidelines implemented at CrédiBanco during
2000 were directed at the continuation of retailer and endcustomer loyalty improved profitability and increased market
share in the various target segments, in addition to improvement
of the quality of the credit portfolio. To this end, CrédiBanco
continued its efforts to improve its service through constant
rationalisation of resources and through a realignment of
procedures in the operational areas. It also redirected its
commercial efforts to those businesses of greater potential,
while exploiting, in a co-ordinated manner, the commercial
capabilities of the banking distribution networks. There was
also a focus on innovative promotion campaigns and the
Company significantly increased its capacity to recoup
non-performing loans.
During the year CrédiBanco also took over further specialised
credit business as a result of the acquisition of the financial area
of the Mello Group and of the strategic partnership entered into
with the Pereira Coutinho Group. In keeping with the strategic
guidelines established for the BCP Group, CrédiBanco was
involved in the restructuring of the Group’s business. This
involved the incorporation of Banco Mello’s non-banking credit
cards, the transfer of the point-of-sale motor-loan portfolio to
Interbanco, and the merge of Mello Financiamento Especializado, SGPS, Sociedade Unipessoal, S.A., and Mello Crédito,
Sociedade Financeira para Aquisições a Crédito, S.A., effective
as from December 29, 2000.
As far as the macroeconomic surroundings are concerned,
consumer credit was negatively affected by the slowdown of the
economy and of domestic consumption. Higher oil prices on the
international market and the successive interest-rate increases by
the ECB were mirrored in higher inflation and in the fall of
consumer confidence. This all had an impact on car sales, one of
the clearest indicators of individual purchasing power. However,
as a result of the aggressive commercial strategies implemented
by the various credit institutions operating on the Portuguese
market and level of interest rates continuing to be relatively low,
notwithstanding the increases seen over the past eighteen months,
loans to individuals continued to be remarkably dynamic.
As far as the CrédiLar network is concerned, the focus continued
to be on service and on increased commercial support to the
network of shops, as a means of increasing the degree of loyalty of
the major shop-owners that subscribe to the service. The similar
business undertaken by the financial area of the Mello Group was
also taken over by the network. Notwithstanding the fall in car
sales, the increased effectiveness of the commercial efforts made
by the CrédiCar network led to a sharp growth of turnover. The
ongoing focus on improving the standard of the dealers involved
and on increasing the weight of car financing, to the detriment of
general personal loans and with a view to improving loan quality,
led to a slowdown of the Insurance Network business. However,
CrédiBanco’s improved articulation with the Group’s banking
distribution networks was to create greater public awareness of
long-term renting, and this was to contribute to the sharp growth of
the turnover of the Banking Network.
The strategic importance of credit cards to CrédiBanco’s business
was fully confirmed in 2000. The card programmes launched
during the previous year were fostered and new ones were
launched, in the field both of the co-branded cards – Bonança
American Express and BP Visa – and of the private cards, with
emphasis on the launch of the Singer and Excel cards.
Loans and advances to customers extended by CrédiBanco
stood at PTE 51 billion as at December 31, 2000, reflecting
moderate growth. Allied to the preservation of unit margins, this
provided a 4.3% increase of Net interest income compared to
the figure for the previous year. The very good performance
seen under Other income led to Net income being returned in the
sum of PTE 1.017 billion, an increase of 25.3% over last time.
In a context that is expected to be not as good insofar as
consumer credit is concerned, CrédiBanco will continue to
focus on improving its service, seen as the factor that distinguishes
it in a market that is becoming increasingly competitive, on
rationalising resources, on the operation of alternative
distribution channels and on penetration into those segments of
the market in which there is growth potential and can provide
attractive returns.
Highlights of CrédiBanco
Total Assets
Loans and advances
Net interest income
Net interest margin
Other income (net)
Operating costs
Net income
ROE
ROA
Number of employees
2000
1999
57,583
51,039
7,302
6,860
3,112
4,847
1,017
12.3%
1.7%
314
53,303
49,993
8,611
6,580
1,699
3,956
812
9.8%
1.4%
320
∆%
8.0%
2.1%
-15.2%
4.3%
83.1%
22.5%
25.3%
-1.9%
(PTE Million)
INTERBANCO
Interbanco’s business continued to be largely influenced by the
performance of the motor trade and this meant that it was not as
dynamic as last year, in line with the number of cars and vans
sold during 2000, which was only slightly higher. Interbanco’s
estimated share of the car and light goods vehicle financing
market is estimated at 14% for the year as a whole.
Within the scope of the restructuring of the BCP Group’s pointof-sale vehicle financing business, Interbanco has become the
Group’s platform specialised in this area. This implied the
transfer during the year of the portfolios managed until then by
other Group companies. Since May, therefore, all the business
sourced by Mello Crédito has been managed by Interbanco, the
transfer of the operations having been concluded in mid
September following the final migration of the point-of-sale
vehicle financing business from Mello Crédito. A similar process
took place during December involving the migration and
integration of the similar business sourced by CrédiBanco.
Capital financed during 2000, including long-term rental (LTR),
totalled PTE 64.8 billion, an increase of 20% over the figure for
the previous year. The balance of Loans & advances to customers
rose from PTE 56.1 billion as at December 31, 1999, to
107.2 billion a year later. This was the result of the growth of the
business and of the migration of the Mello Crédito and
CrédiBanco vehicle financing portfolios.
As a result of the sharp growth of Assets during the second half,
the Bank’s Own funds were increased through a bond loan in the
sum of EUR 15 million and through supplementary share capital
put up in the sum of PTE 3 billion.
Consolidated Net income in 2000 stood at PTE 1.544 billion, an
increase of 10.2% over the previous year. The sharp growth of
revenue as a result of the migration of the portfolios and of the
natural growth of the business should be underscored, as should
the growth of transformation costs, particularly staff costs,
reflecting the allocation of Mello Crédito and CrédiBanco
employees to Interbanco following the restructuring of this
business within the BCP Group.
During 2001, Interbanco, as a specialised credit platform, will
continue to hone its skills in the management of the specialised
financial business inherent in the motor trade, with a view to
increasing turnover, while preserving adequate returns. It will
also focus on differentiation and on cross-selling services as
factors determinant to achieving greater penetration of the
second hand market and to increasing its leadership of the new
vehicle financing market.
Highlights of Interbanco
Total Assets
Loans and advances
Net interest income
Net interest margin
Other income (net)
Operating costs
Net income
ROE
ROA
Number of employees
2000
1999
129,505
107,163
8,458
5,090
1,939
3,117
1,544
20.1%
1.8%
226
70,789
56,051
7,955
4,080
1,583
2,905
1,401
18.5%
2.2%
169
∆%
82.9%
91.2%
6.3%
24.7%
22.5%
7.3%
10.2%
33.7%
(PTE Million)
43
CLASSIS AUTO PLAN
During 2000, Classis continued to be the only company
specialised in operational vehicle renting in Portugal to market
its products, under an autonomous brand, through a banking
channel. Its business was marked by heavy investment and by
sharp growth, allowing the company to achieve the capital
growth required to ensure its development and profitability,
despite the widespread increase of competition, despite no
significant increase in the number of competing companies in
this sector.
Several measures were implemented during the year under
review, designed to foster the commercial activity of the BCP
Group’s distribution channels and to increase turnover. Here,
the emphasis was on the launch of in-house campaigns directed
at the commercial structure of the Group’s banking networks.
Other campaigns were directed at the customers of the Group’s
main individuals and small businesses banking networks. At the
same time, control of structural costs was subject to constant
attention with a view to improving the company’s cost to income
ratio and to ensuring its competitiveness.
The performance and capability shown by the commercial
networks of the BCP Group in fostering the business made a
decisive contribution to the sustained increase of production
during 2000, bringing the total number of Classis customers
up to more than one thousand by the end of the year. Of these,
some 80% were corporate customers. The fleet under
management rose to over six thousand vehicles, almost twice
the number seen the previous year. After just two full years of
business, the Company is now in an outstanding position in the
sector.
Classis will continue to pursue its medium- and long-term
strategy and, in the coming years, its business will be focused on
the following aspects: enlarging its customer base, with no
fall-off as far as quality is concerned; development and
enhancement of relations with the existing customer base; and
implementation of complementary, alternative channels of
communication with present and potential customers,
particularly via the Internet. To contribute to the implementation
of this channel, the measures planned for 2001 include, among
others, increased commercial monitoring of the major banking
networks, with a view to identifying and securing business
opportunities, on a par with enhancing awareness campaigns
and training courses, designed to provide the networks with
profound knowledge of the Renting business.
ASSET MANAGEMENT
AF INVESTIMENTOS
Against an economic background not very propitious to the
growth of asset management business, in which the volumes
traded on the domestic market actually fell, AF Investimentos
not only increased significantly the total volume of its portfolio
during 2000 but also increased its market share to 38% in the
mutual funds business as at December 31, 2000. This must be
44
underscored, as must the competitive repositioning implemented
in response to the increasing competition in the sector and to the
need for a strategic reassessment of the distribution channels as
a result of the appearance of new forms of marketing introduced
into the asset management business.
The AF Investimentos business was centred on three main
aspects, each appealing to its own particular expertise. The
first was a constant concern to provide a diversified range of
products and services, taking full advantage of an economic
environment marked by considerable instability and by the
poor performance of the capital markets, on a par with an
appreciable increase of interest rates. The second, continuity
of the commercial measures that allowed an improvement of
the portfolio mix, bringing it more into line with those of the
most advanced European in this field. Lastly, increased support
to the distribution networks of the BCP Group, as a means to
improving the penetration rate of financial disintermediation
products.
In this connection, a new international mutual fund was launched
– “AF America” – designed to bring together a representative
sample of shares of the world’s biggest capital market. Two new
closed capital-guaranteed funds were also launched, directed at
the individuals segment and were marketed across the Group’s
commercial networks. These were the “Nova Economia 2005”,
which invests in equities related to state-of-the-art technologies,
namely, telecommunications, the Internet and biotechnology;
and “Valor Futuro 2005”, which picked shares in companies
related to sectors to do with new life styles and consumer
preferences. Both these funds provided an offer adapted to the
economic conditions of the market, while their investment
policy was focused on sectors where there were expectations of
growth and returns.
As far as internal reorganisation and the clarification of the
range of funds is concerned, AF Investimentos implemented a
complex process involving the merge of companies and funds as
a result of the incorporation of Banco Português do Atlântico
and Banco Mello into Banco Comercial Português. This provided
operating synergies and meant that the customer offer came to
be clearer and more objective, to the extent that the merger of the
funds led to the elimination of the overlap of those funds whose
investment policies were identical and whose requirements in
the satisfaction of their respective customer segments were the
same. The relaunch of the asset management business of the
SottoMayor network also contributed to the sharp increase of
the volume of assets under the management of AF Investimentos,
contrary to the downward trend seen on the domestic market as
a whole.
Within the scope of AF Investimentos’ marketing strategy, 2000
saw the creation of a CRM (Customer Relationship Management)
unit. It began its activity directed at the Group’s commercial
networks towards the end of the year. Statistical and behavioural
evaluation models are to be used and they are expected not only
to open up the way to further growth of the business through
more accurate identification of those customers with a greater
propensity to subscribe to investment funds but also to test
different types of offer and the use of new channels in the
approach to customers.
At the end of the year the total volume of Assets under
management stood at PTE 3,982 billion, an increase of
40.7% over the figure for the end of the previous year,
considerably higher that the market average. This reflected
not only the excellent performance of the business but also
the incorporation of the Banco Mello fund portfolio and the
start to the marketing of the AF funds through the
SottoMayor network. The main profitability indicators
mirror not only the good performance of the asset
management business but also the efforts directed at
containing operating costs, which generally speaking compare very well with those of the previous year. Net income
was up 17.2% at PTE 5.8 billion.
As a result of the integration of the insurance companies of
the BCP Group and of the banking and insurance businesses
of Achmea Holding into Eureko BV, the two groups
announced a joint initiative at the end of November, involving
the launch early in 2001 of an international asset management
company – EGAM-Eureko Global Asset Management. This
new company will combine the BCP and the Achmea
investment management business, basing its growth on the
asset management skills and capabilities of both partners.
With a view to strengthening the capabilities and enlarging
the scope of its involvement in this business area, seen as
being of great strategic importance, Eureko BV acquired a
90% stake in Foreign & Colonial Management Limited
(F&C). This is one of the United Kingdom’s major managers
in the pension fund and investment fund management
business, and it also has a large volume of business on the
German market. EGAM and F&C are to integrate their
businesses, giving rise to a single asset management platform
that will have a portfolio under management in the sum of
about EUR 120 billion. It will operate under the Foreign &
Colonial brand and will stand among the leading asset
managers at European level.
Within the scope of the partnership between the BCP Group
and Eureko directed at the pursuit of asset management
business, AF Investimentos will provide consultancy for the
investment fund business of the new entity, including market
and company research. In this way, it will strengthen is
competitive stance, in addition to contributing to the viability
of a pan-European strategy in the field of asset management,
focused on going beyond the present scope of the Eureko
Group’s operations, on enlarging its customer base and on
attracting new partners.
Highlights of AF Investimentos
Assets under management
Investment funds
Portfolio management
Net commissions
Operating costs
Net income
ROE
Number of employees
(PTE Million)
2000
1999
3,981,992
1,984,160
1,997,831
15,412
2,305
5,786
65.8%
144
2,829,885
1,593,189
1,236,696
12,028
2,049
4,938
49.2%
114
∆%
40.7%
24.5%
61.5%
28.1%
12.5%
17.2%
26.3%
MORTGAGE LOANS
BANCO DE INVESTIMENTO IMOBILIÁRIO
The main objectives of Banco de Investimento Imobiliário
(BII) during the year under review called for sustained growth
of its mortgage loan portfolio and preservation of the returns on
its assets. The year was one of higher interest rates and restrictions
to access to subsidised loans, in which the financial institutions
focused sharply on the mortgage loan business, investing heavily
in communication campaigns, in attractive pricing and in the
diversification of the channels used to market this class of
product.
Following several years of strong growth, the mortgage loan
market in 2000 confirmed the tendency towards a slowdown
seen during the second half of the previous year. Several factors
contributed to this slowdown, including higher interest rates and
the legislation governing mortgage loans, the impact of which
had been seen in the second half of 1999. However, its full effect
on the sector was felt only during 2000.
New legislation governing mortgage loans was enacted on
December 15, 2000, to take effect in April 2001. This revoked
all existing legislation in this area. The purpose of the new law,
which in no way altered the overall reform introduced by the
previous legislation, was to clarify and simplify the rules
introduced by the decree-law now revoked, the aim being to
prevent abuse and non-compliance with the law.
In pursuing its strategy, which constitutes the benchmark for the
property market, and taking into account the concept of security
and pricing that, taken together, are what potential customers
look for, BII launched a portfolio of new products in September
2000. Emphasis is given to the “Flexible Home Loan” – a
floating-rate loan the main feature of which is that the monthly
instalment remains unchanged and interest-rate fluctuations are
reflected in alterations to the term of the loan; “Fixed Rate 3- and
10-years; “Fixed Rate 7 Years” solely for Banco7 customers;
and “Flexible Property Loan” – a mortgage loan product that
does not fall within the scope of home loans, but consists of
loans to buy real-estate for investment purposes, directed at
customers who invest in the property market.
From the marketing standpoint, the new products were dealt
with in several campaigns launched by the main distribution
brands of the BCP Group, and attention is drawn to the powerful
media campaigns by NovaRede, Atlântico and SottoMayor
during the last four months of 2000. As far as property
development loans are concerned, there was increased cooperation with the Group’s distribution networks, the aim being
to attract new business and to focus on risk quality in approving
loans. At the end of 2000, the portfolio of outstanding loans
stood at PTE 464 billion, of which mortgage loans accounted for
69.8%, property developer loans for 30.1% and real-estate
leasing for the remainder.
BII’s business during the year under review was conditioned by
the split and merger of Banco de Investimento Imobiliário into
Banco Comercial Português and by the merger by incorporation
of BMI, S.G.P.S., and Banco Mello Imobiliário into BCP. These
45
operations took effect on December 15, 2000. They consisted
of: i) the split and subsequent merger of BII, involving the
separation of that part of its assets and liabilities linked to
mortgage loan transactions with Group customers that had been
contracted though the branches of all the networks of the BCP
Group with the exception of BII itself, which were then merged
into BCP; and ii) a merger by incorporation of Banco Mello
Imobiliário and BMI, S.G.P.S., into BCP through the transfer of
all the assets of both these companies to BCP, with the resultant
winding up of the companies incorporated.
The acquisition of Banco Mello and Banco Pinto & Sotto Mayor
by BCP affected every one of the Group’s business areas, and
Banco de Investimento Imobiliário was no exception. As from
April 2000, every mortgage loan and property developer loan
sourced via SottoMayor was redirected to BII for analysis,
decision and implementation. As from the end of May 2000 this
was also the case of the loans contracted via the Banco Mello
Branches.
the jobs and staff allocated to the decision, contracting,
loan-recovery and real-estate credit management were
reassigned to ServiBanca. These events naturally distort an
appraisal of the business variables and results compared to
those of the previous year, since the situation was then quite
different. As at December 31, 2000, Total assets and Loans and
advances to customers stood at PTE 800 billion and 464 billion
respectively. Net interest income amounted to PTE 16.2 billion.
The proportion of Non-performing loans to Total loans stood at
0.8%, while the cover of past-due loans by credit-risk provisions
amounted to 157%.
Focusing its business mainly on financing property developers
and on fostering the commercial work of its own networks of
Shops, BII will continue to support the business of the BCP
Group’s distribution networks, particularly in the concept of
mortgage loan products targeting the home-loan business for the
individual customer segment.
Highlights of Banco de Investimento Imobiliário
Pursuing its strategy designed to diversify its funding, calling
for the preservation of an adequate relationship between
own funds and weighted risks, and for the minimisation of
interest expense, BII made a cash bond issue in the sum of
EUR 250 million during July 2000.
The performance of BII’s balance sheet and financial indicators
reflect the split that took place on December 15, with effect as
from September 1, and the consequent increase of its share
capital to EUR 94.5 million. In the wake of this operation,
46
Total Assets
Loans and advances
(of which Mortgage)
(of which Construction)
Net interest income
Number of employees
Number of branches
(PTE Million)
2000
1999
800,423
464,484
324,435
139,744
22,943
206
20
1,482,178
1,187,111
1,079,783
105,352
29,778
357
23
∆%
-46.0%
-60.9%
-70.0%
32.6%
-23.0%
-42.3%
-13.0%