The government of Cabo Verde has taken a majority stake in the country’s largest bank, Caixa Económica de Cabo Verde (CECV), and the company that was previously its largest shareholder has sold its entire holding.
State-owned Instituto Nacional de Previdência Social purchased the 12.5 % stake owned by private insurance company Impar. With the 32% it already owned, that took its stake to 44.5 %. State-owned Correios also has a stake of 15%. This takes to the government’s total share to 59.5%.
Previously, the largest shareholder was Geocapital. Following the government’s move, it decided to sell its 27% stake to Enrique Banuelos de Castro, a Spanish shareholder of International Holding Cabo Verde, in a transaction outside the capital market that had already been approved by the Bank of Cabo Verde.
Under the board appointed by Geocapital, CECV grew from the second largest bank in the country, far behind the leader, into its biggest. The government made the decision to take a majority stake because it wants to increase its footprint in the financial sector.
Our sources tell us that the deal was the result of an agreement between the government, through Finance Minister Olavo Correia: the management of CECV: and the shareholders of Geocapital. It gained control of the bank almost a decade ago, after having acquired the stake of Portuguese firm Montepio Geral.
Originally the deal was to have closed by May 2018 but was delayed. This was caused by the process of finding a shareholder willing to pay the amount demanded by Geocapital – around EUR 12 million: and also avoid disruption to the capital market as a result of the government’s increased stake in the bank.
CECV is listed on the Cabo Verde Stock Exchange. Between early and August 2017, the purchase and sale agreement of Ímpar was blocked by Bank of Cabo Verde. It needed approval by the General Audit of the Securities Market, which operates under the central bank governor and has functional and administrative autonomy.
The impasse was only resolved with the replacement of the former general auditor of the Securities Market director, Maria Encarnação Silva Rocha; he considered that the state should make a public tender offer for CECV. But the new board of directors, whose general auditor is Pedro Lima da Rocha, approved the sale.
Most people in the banking sector consider the manner of the sale – without a public tender – to be detrimental to the interests of small shareholders and the credibility of the capital markets and its regulations.
The sale of Impar’s stake in CECV allowed the insurance company to purchase 51% of Banco Caboverdiano de Negócios from Oitante (former Banco Internacional do Funchal – Banif). The move of Impar into the banking sector was led by Luís Vasconcelos Lopes, board member of the insurance company and now Banco Caboverdiano de Negócios ‘s chief executive officer.
Vasconcelos Lopes´ agreement with the new government was in line with the objective of Impar – a group controlled, directly and indirectly, by Portuguese businessman Joaquim Coimbra – to take over the management of a bank.
The market saw the move was seen as being approved by the government, which oversees Instituto Nacional de Previdência Social; it wanted this institute to increase its stake in CECV and approved the purchase price, above market value.
The changes in Cabo-Verdean banking have led to a marked reduction in the presence of Portuguese capital. They have caused the forced sales of Novo Banco´s (former Banco Espírito Santo) holdings in Banco Internacional de Cabo Verde and Banif´s in Banco Caboverdiano de Negócios, and now of Caixa Geral de Depósitos in Banco Comercial do Atlântico to comply with regulatory requirements of the European Central Bank. The management of Geocapital was Portuguese. Portuguese capital will soon be limited to Banco InterAtlântico and Banco Caboverdiano de Negócios (controlled by Coimbra’s Impar).
In 2018, CECV reported a record profit and was leader in the Cabo Verde market in terms of granting credit. Its closest rival was Banco Comercial do Atlântico, which is owned by Portuguese state financial group Caixa Geral de Depósitos. Each has about one third of the market, followed by Banco Caboverdiano de Negócios and BAI Cabo Verde, with Angolan capital.
Despite the sale of its shares in CECV, Geocapital still considers the Cabo Verde market strategic. It plans to reinvest in the local financial system, as it did in Mozambique, where it exchanged a participation in Moza Banco for control of Banco Mais.