Portugal CGD Has 60 Days To Decide on CTT Postal Bank

Portugal’s largest bank, the state-controlled Caixa Geral de Depositos (CGD) has 60 days to inform local postal service operator CTT – Correios de Portugal whether it will exercise its preference right on the future CTT’s postal bank, it was reported on January 28, 2005.

CTT has already informed CGD on its agreement with Portuguese bank Banif to resume the postal bank project. It was reported earlier that Banif and CTT had reached an agreement for the establishment of a new retail bank with a share capital of 35 mln euro ($45.6 mln). The bank will serve individuals and small companies. In terms of the distribution of the product, the new bank will rely on the existing network of CTT offices, while in operating terms, it will rely on the Banif infrastructure.

CGD was CTT’s first partnership for a postal bank. Both companies established the bank Banca Postal in 2002. Soon after both parties reached an agreement for the establishment of the bank, CTT sold its stake in it to CGD. After Banca Postal ceased operations in 2004, CGD remained with a preference right on a future postal bank of CTT. CTT is obliged to present the project for the future postal bank to CGD, and the bank should decide whether it would participate in it or not. If CGD decides to abdicate from its preference right, this might result into a compensation of up to 3.5 mln euro ($4.6 mln) to be paid to the state bank.