CAIXA GERAL DE DEPÓSITOS, S.A. (incorporated with limited liability in Portugal)

Transcription

1 SUPPLEMENT DATED 5 JUNE 2018 CAIXA GERAL DE DEPÓSITOS, S.A. (incorporated with limited liability in Portugal) acting through its France branch CAIXA GERAL DE DEPÓSITOS, S.A. (incorporated with limited liability in Portugal) 15,000,000,000 Euro Medium Term Note Programme This supplement (the Supplement ) to the base prospectus dated 23 February 2018 (the Prospectus ) constitutes a supplement for the purposes of Article 13(1) of the Luxembourg Law on Prospectuses for Securities of 10 July 2005, as amended, and is prepared in connection with the 15,000,000,000 Euro Medium Term Note Programme (the Programme ) established by Caixa Geral de Depósitos, S.A., acting through its France branch ( CGDFB ) and Caixa Geral de Depósitos, S.A. ( CGD ) (each an Issuer and together the Issuers ). Terms defined in the Prospectus have the same meaning when used in this Supplement. This Supplement is supplemental to, and should be read in conjunction with, the Prospectus and the documents incorporated by reference therein. Each of the Issuers accepts responsibility for the information contained in this Supplement. To the best of the knowledge of each Issuer (each having taken all reasonable care to ensure that such is the case) the information contained in this Supplement is in accordance with the facts and does not omit anything likely to affect the import of such information. Purpose of this Supplement The purpose of this Supplement is (i) to incorporate by reference into the Prospectus (a) the audited annual consolidated financial statements of CGD as at and for the year ended 31 December 2017 (the 2017 Annual Report );and (b) the unaudited consolidated balance sheet and income statement of CGD as at and for the three month period ended 31 March 2018 (the Q Interim Financial Results ); (ii) to provide an update in connection with certain recent developments relating to CGD; and (iii) to update the no significant change/no material adverse change statement in the Prospectus Annual Report On 25 May 2018, CGD published its 2017 Annual Report as at and for the year ended 31 December The CGD 2017 Annual Report has been audited by Ernst & Young Audit & Associados SROC, S.A., auditors of CGD. A copy of this 2017 Annual Report has been filed with the Commission de Surveillance du Secteur Financier and is incorporated by reference in, and forms part of, the Prospectus. This Supplement and a copy of the document incorporated by reference herein will be available for viewing at the website of the Luxembourg Stock Exchange ( 1

2 The information incorporated by reference that is not included in the cross-reference list, is considered as additional information and is not required by the relevant Schedules of Regulation (EC) No. 809/2004 as amended. The information incorporated by reference above is available as follows: 2017 Annual Report Page Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Cash Flow Statement Consolidated Statement of Changes in Shareholders Equity Notes to the Consolidated Financial Statements Audit Reports and Opinions on the Consolidated Financial Statements Q Interim Financial Results On 10 May 2018, CGD published its Q Interim Financial Results as at and for the three month period ended 31 March A copy of this Q Interim Financial Results has been filed with the Commission de Surveillance du Secteur Financier and is incorporated by reference in, and forms part of, the Prospectus. This Supplement and a copy of the document incorporated by reference herein will be available for viewing at the website of the Luxembourg Stock Exchange ( The information incorporated by reference that is not included in the cross-reference list, is considered as additional information and is not required by the relevant Schedules of Regulation (EC) No. 809/2004 as amended. The information incorporated by reference above is available as follows: Q Interim Financial Results Page Unaudited Consolidated Balance Sheet Unaudited Consolidated Income Statement Certain recent developments relating to CGD Risk Factors: The text of the risk factor under the heading Exposure to CGD s credit risk on page 8 shall be replaced with the following, to adjust for Moody s and DBRS rating/outlook update to CGD s long term and short term debt: CGD s short and long term ratings issued by the international rating agencies were updated in 2017 and On 21 December 2017, Fitch Ratings Limited ( Fitch ) affirmed CGD s BB-/B long-term and shortterm ratings, with a positive outlook. On 27 February 2018, Moody s Investors Services Ltd. ( Moody s ) upgraded CGD s long term deposit and senior debt ratings from B1 to Ba3, with a stable outlook. Other issued securities and the baseline credit assessment were placed on review with direction uncertain. On 4 June 2018, DBRS Rating Limited ( DBRS ) affirmed CGD s BBB (low)/r-2 (middle) long-term and short-term ratings, with a positive outlook. Any further downgrading of the ratings of CGD may adversely affect its funding and therefore its financial performance. The first two sentences of the risk factor under the heading Portugal may be subject to further rating review by the rating agencies, with implications on the funding of the economy and on CGD s activity on page 9 shall be updated as follows, to adjust for DBRS s rating update for Portugal s long term debt: 2

3 The rating agencies Standard & Poor s Credit Market Services Europe Limited ( S&P ), Moody s, Fitch and DBRS have, over the last year, updated Portugal s long term rating or outlook. Current ratings are as follows: S&P: BBB- as of 15 September 2017, with a stable outlook as of 15 September 2017; Moody s: Ba1 as of 27 July 2014, with a positive outlook as of 1 September 2017; Fitch: BBB as of 15 December 2017, with a stable outlook as of 15 December 2017; and DBRS: BBB as of 20 April 2018, with a stable outlook as of 20 April The following shall be included after the sixth paragraph of the risk factor under the heading The fulfilment of current and future capital requirements, as set out by the European Commission, the European Parliament (together, the European Authorities ) by the Bank of Portugal and by the ECB could lead to the CGD Group facing adverse consequences on page 12: Pursuant to a decision of its Board of Directors of 27 March 2018, the Bank of Portugal, in the exercise of its powers as national macro-prudential authority, decided that the countercyclical buffer rate in force in the 2nd quarter of 2018 will remain unchanged at 0 per cent. of the total risk exposure amount. This capital buffer will apply, from 1 April 2018 onwards, to all risk exposure amounts, whose counterpart is the Portuguese private non-financial sector, or credit institutions and investment firms subject to the supervision of the Bank of Portugal or the European Central Bank (Single Supervisory Mechanism), as applicable. This policy measure will be reviewed on a quarterly basis by the Bank of Portugal and published on its website, together with the underlying analysis and data. Further information on the countercyclical buffer rates that apply to credit risk exposures to EU/EEA Member Countries is also available on its website. The following shall be included before the final sentence in the paragraph under the heading Regulatory changes may have a negative impact on the Group on page 14: Relevant legal changes may also include legal amendments (including legislative measures currently in discussion or approved in Parliament and expected to be published soon) in respect of the calculation and application of indexes, such as EURIBOR, to variable rate loans granted to clients, including housing loans, whereby credit institutions may be required to fully discount or compute in the clients favour the negative variable rate determined by the index in principal and/or interest payments due by clients. The following shall be included before the last paragraph of the risk factor under the heading The impact on the Group of the recent resolution measures in Portugal cannot be anticipated on page 23: On 28 March 2018, Novo Banco announced its results for financial year ended 31 December 2017 and reported a net loss of 1.4 billion. On the same date, the Resolution Fund issued a press release as follows: In the context of the share purchase and subscription agreement between the Resolution Fund and Lone Star (as referred above), as at 28 March 2018 the amounts to be paid by the Resolution Fund to Novo Banco in 2018 in respect of the 2017 financial statements amount to 792 million. A contingent capital mechanism was set up under which Novo Banco may be compensated up to a maximum of 3.89 billion for losses in case specific cumulative conditions are met, related to (i) the performance of specific assets of Novo Banco and (ii) the evolution of the capital ratios of the bank. The amount now announced by Novo Banco falls within the scope of the obligations of the Resolution Fund and is within the defined limit. The payment due by the Resolution Fund in 2018 will be made after a legal certification of Novo Banco s financial statements and after a verification procedure, from an independent entity, to confirm if the amount to be paid by the Resolution Fund was correctly ascertained. 3

4 The Resolution Fund will firstly use the financial resources directly or indirectly received from contributions from the banking sector. The remaining will be provided by a State loan, in the terms agreed in October The exact amount of that loan is not yet set, but it is estimated that it will not go over 450 million, standing below the 850 million annual limit, inscribed in the State Budget. The payment due by the Resolution Fund is in line with the normal execution of the agreements related to the sale of Novo Banco, as announced about a year ago and will take place in accordance with the proceedings timely established. So far, the Resolution Fund has disbursed the total amount of 4,900 million to support the resolution measure applied to Banco Espírito Santo, S.A., corresponding to Novo Banco capitalisation in August Since then, the Resolution Fund has not carried out any payments related to Novo Banco s capitalization but has however included a provision of 792 million into its financial statements for the year ended 2017 related to the payment due in In return, the Resolution Fund maintains the participation of 25% in Novo Banco s equity. On 24 May 2018, the Resolution Fund made a payment to Novo Banco in the context of the contingent capital mechanism. On the same date, the Resolution Fund issued a press release as follows: The Resolution Fund made the payment to Novo Banco resulting from the application of the contingent capital mechanism agreed in the context of the sale process concluded on 18 October The amount paid by the Resolution Fund on this date was 791,694,980. The Resolution Fund used its own resources, received from the contributions paid, directly or indirectly by the banking sector, supplemented by a State loan in the amount of 430,000,000. The payment was made after the legal certification of Novo Banco s financial statements and after the necessary verification procedures were concluded, which confirmed that the necessary conditions, that in the terms foreseen in the agreement give rise to the payment, were met, as well as after the exact amount to be paid by the Resolution Fund was confirmed. This payment is the result of the agreements executed in March On the occasion, it was disclosed that the conditions agreed in the context of the partial sale of the Resolution Fund s participation in Novo Banco include a contingent capital mechanism that determines that the Resolution Fund commits to make payments to Novo Banco, in case certain cumulative conditions are met, these are related to: (i) the performance of specific assets of Novo Banco and (ii) the evolution of the capital ratios of the bank. The amount now paid falls within the scope of the obligations of the Resolution Fund. Description of the CGD Group: The following shall be included after the last paragraph of the section under the heading Strategic Plan on page 98 to include the new pillar of CGD s Strategic Plan: Pillar 5 The additional pillar Customer service was created at the end of 2017 and introduced to respond to the challenges of digitalisation. This pillar includes a strategic initiative which will implement CGD s digital transformation strategy and redesigned Customer Experience. This pillar will also further optimise customer service levels. In the section under the heading Board of Directors the description of the non-executive members of the Board of Directors of CGD on pages 99 and 100 shall be replaced with the following, to adjust for the 4

5 election of two additional board members on 9 April 2018 and the resignation of another board member on 30 April 2018: In addition, on 17 March 2017, the following members of the Board of Directors of CGD were elected as non-executive members for the 2017 to 2020 term, with effect from 20 March 2017, except for Mr. Alberto Souto de Miranda who was elected on 1 August 2017, Mr. Hans-Helmut Kotz who was elected on 19 October 2017 and Mrs. Mary Jane Antenen and Mrs. Altina de Fátima Sebastian Gonzalez Villamarin, who were elected on 9 April Maria dos Anjos Capote was also elected on 17 March 2017 as non-executive member for the 2017 to 2020 term, with effect as from 20 March 2017 and has resigned on 30 November Mr. João Amaral Tomaz was also elected on 17 March 2017 as nonexecutive member for the 2017 to 2020 term, with effect as from 20 March 2017 and has resigned on 30 April Ana Maria Machado Fernandes José Maria Monteiro de Azevedo Rodrigues Alberto Souto de Miranda Hans-Helmut Kotz Mary Jane Antenen Altina de Fátima Sebastian Gonzalez Villamarin The section under the heading Position in other companies of the Group shall be updated, with the information relating to Mr. João Amaral Tomaz being replaced with the following information in respect of Mrs. Altina de Fátima Sebastian Gonzalez Villamarin: Position in other companies of the Group Name Position Companies Altina de Fátima Sebastian Gonzalez Villamarin Independent Member of the Board of Directors Chairman of the Auditory and Regulatory Compliance Committee Chairman of the Remuneration Committee Banco Caixa Geral, S.A. The section under the heading Relevant activities outside the Group shall be updated, with the information relating to Mr. João Amaral Tomaz being replaced with the following information in respect of Mrs. Mary Jane Antenen and Mrs. Altina de Fátima Sebastian Gonzalez Villamarin: Relevant activities outside the Group Name Position Companies Mary Jane Antenen Chairman of the Advisory Board Sonetec (Fin. Tech start-up), Switzerland Altina de Fátima Sebastian Gonzalez Independent Member of the Board of Directors Grupo Empresarial San Jose 5

6 Name Position Companies Villamarin Chairman of the Auditory and Regulatory Compliance Member of the Advisory Board Advisor to Portugal no Mundo and member of the World Portuguese Network External Consultant Associated Professor Coordinating Teacher for the Banking Programmes in Luanda - Angola Expansion y Actualida Economica Conselho da Diáspora Portuguesa Associação Portuguesa de Bancos Universidad Complutense Universidade Católica Portuguesa The following paragraphs included in the section headed Recent Developments shall be amended as follows, to update certain numbers: The paragraph starting On 2 February 2018 CGD published the Consolidated Results on page 144 shall be amended as follows: On 2 February 2018 CGD published the Consolidated Results for the year ended 31 December The main highlight is the successful implementation of CGD s Strategic Plan 2020, resulting in an improvement in its levels of efficiency and profitability and leading to a net income of 51.9 million. Other highlights include: The paragraph starting The loans-to-deposit ratio 10 on page 144 shall be amended as follows: "The loans-to-deposit ratio 10 of 87 per cent. in CGD s balance sheet for the year ended 31 December 2017 reflected the strong confidence of CGD s customer base, even in an environment of historically low interest rates on deposits, retaining its leading position in the domestic market with a total 26.4 per cent. share of deposits in December 2017 (29.9 per cent. in the case of individual customers deposits); [footnote 10: Definition included in the Annex Alternative Performance Measures.] The paragraph starting The phased-in and fully implemented CET1 ratios on page 145 shall be amended as follows: The phased-in and fully implemented CET1 ratios for the year ended 31 December were 14.0 per cent. and 13.9 per cent., respectively, with phased-in Tier 1 and Total ratios of 15.0 per cent. and 15.6 per cent., respectively, complying with the regulatory requirements;" The following new paragraphs shall be included at the end of the section headed Recent Developments : In March 2018 DG Comp (European Commission) agreed to the future issuance by CGD of Tier 2 debt as a form of compliance with the subordinated debt requirement included in the Recapitalization Plan. On 10 May 2018 CGD published its consolidated results for the three months ending 31 March The main highlight is the successful conclusion of the first year of the CGD 2020 Strategic Plan, with CGD starting 2018 with a clear progression in its path towards profitability, efficiency and asset quality. In fact the consolidated net income reached 68.0 million, exceeding the negative 38.6 million in the 6

7 same quarter last year, and the 51.9 million obtained for the entirety of Other highlights include: CGD Portugal s net income of million was up 6.1 per cent. compared to the same period of the preceding year despite the drop in consolidated net interest margin (-1.1 per cent), adversely impacted by foreign exchange effects. Commissions were up 9.4 per cent. (+ 9.9 million) in the first quarter of 2018 compared to the end of March In Portugal, the 13.8 per cent. increase reflected the measures of the strategic plan implemented in The 11.3 per cent. reduction ( million) in recurring operating costs 1 derived from the consistent action on employee costs (-8.4 per cent.), general administrative costs (-12.5 per cent.) and depreciation and amortisation (-28.1 per cent.). The reduction of the cost of credit risk 2 by 0.22 per cent. reflects net credit impairments of 33.4 million for the three months ending 31 March The core operating result 3 was up 27.3 per cent. compared to March 2017 to million. Cost-to-core income evolved favourably, reaching 58.0 per cent. Both indicators benefited from the growth of commissions and implementation of cost reductions referred to above. The evolution of CGD s asset quality was favourable, with NPLs (non-performing loans) according to the EBA s definition, down 592 million (or 7.5 per cent. compared to December 2017), given the positive evolution of sales, cures and recoveries. CGD reduced its NPL by 3.3 billion since December 2017, down 30.9 per cent. when compared to December The NPL ratio 4 stood at 11.4 per cent. at the end of the three months ending 31 March 2018, with impairment and collateral coverage of 60.1 per cent. and 44.4 per cent., respectively, at the same date (with total coverage of per cent.). The total amount of foreclosed assets in real state amounted to 990 million for the three months ending 31 March 2018, against 1,025 million for the twelve months ending 31 December 2016 and 1,025 million for the twelve months ending 31 December Improvement of Texas Ratio 5 from 90.8 per cent. for the twelve months ending 31 December 2016 and 67.7 per cent. for the twelve months ending 31 December 2017 to 65.2 per cent. for the three months ending 31 March CGD s activity continued to benefit from customer resources stability, which amounted to 68,868 million from domestic activity, including off-balance sheet products (investment and pensions funds, financial insurance and floating rate treasury bonds ( OTRV )) which amounted to 19,479 million. 1 Excluding the non-recurring costs of employee reduction programmes for a total amount of 58.0 million in the three months ending 31 March 2017 and 58.5 million in the three months ending 31 March Definition included in the Annex Alternative Performance Measures. 3 Core operating result: Net interest income + results of services and commissions recurring structural costs. 4 NPL Non-Performing loans ratio: Non-performing loans and advances to customers / Total loans and advances to customers (gross). 5 The Texas ratio is determined by calculating non-performing exposures as a proportion of the aggregate of tangible equity and impairments in the balance sheet. 7

8 The liquidity position at the three months ending 31 March 2018 was highly favourable, with an LCR (liquidity coverage ratio) of per cent. CGD s eligible assets included in the Eurosystem pool amounted to 13.5 billion. Customer resources represented 81 per cent. of CGD s funding structure for the three months ending 31 March 2018; debt securities and subordinated liabilities 6 per cent., central banks and credit institutions 5 per cent. and others 8 per cent. The phased-in and fully implemented CET1 ratios, for the three months ending 31 March 2018, were both 13.6 per cent. The phased-in Tier 1 and Total ratios stood at 14.7 per cent. and 15.3 per cent., respectively, complying with the capital requirements in force for CGD. These capital ratios mentioned in the previous paragraph include the full impacts of the implementation of IFRS 9 (-0.25 per cent.), the phased-in ratio for 2018 (-0.06 per cent.) and the deduction of irrevocable commitments associated with mandatory contributions (-0.35 per cent.). The reduction of risk-weighted assets for the three months ended 31 March 2018 produced an increase of 0.25 per cent. RWA fully implemented was 50.7 billion for the three months ending 31 March 2018, maintaining the downwards trend (RWA density at 55.8 per cent. against 56.0 per cent. at the twelve months ending 31 December 2017 and 58.3 per cent. at the ending twelve months ending 31 December 2016). The main contributions to consolidated net income from the international activity, that totalled 38 million, are: BNU Macao with 15 per cent., France Branch 7 per cent. BCI Mozambique 7 per cent. and others 10 per cent. No Significant/No Material Adverse Change Paragraph (2) on page 181 of the Prospectus shall be deleted and replaced with the following: There has been no significant change in the financial or trading position of any Issuer or the Group since 31 March 2018 and no material adverse change in the prospects of any Issuer or of the Group since 31 December To the extent that there is any inconsistency between (a) any statement in this Supplement or any statement incorporated by reference in the Prospectus by this Supplement and (b) any other statement in or incorporated by reference in the Prospectus or any previous supplement to the Prospectus, the statements in (a) above will prevail. Save as disclosed in this Supplement, no other significant new factor, material mistake or inaccuracy relating to information included in the Prospectus has arisen or been noted, as the case may be, since the publication of the Prospectus dated 23 February