Start a bank at the onset of a financial crisis? That’s what a Portuguese group of brokers did in 2008, and this year they have welcomed remarkable results
No one would ever imagine starting a bank in the summer of 2008, especially when you are a small institution in a peripheral country like Portugal. But, in fact, someone did. And four years later in 2012, Banco Carregosa has just had its best quarter ever.
Born in the midst of the 2008 crisis, Banco Carregosa originates from the oldest brokerage firm in the Iberian Peninsula with the first Portuguese female broker as its chairwoman.
When Maria Cândida and her board thought of transforming the former financial brokerage firm L.J. Carregosa into a bank, they could hardly imagine Lehman’s failure, the subprime crisis, the Greek bailout or the external help from IMF, ECB and EU to Portugal.
But that nightmarish scenario became reality over the coming weeks and months. Banco Carregosa kept to its plans and, step-by-step, is becoming a respectful private banking institution, known mainly for its independency.
The institution is dedicated to two main business lines: online brokerage, under the brand GoBulling.com, and private banking, focused on client advisory and wealth preservation.
There are some golden rules which are explained from time to time to all employees: being independent is our main asset, never recommend anything to your clients you wouldn’t buy for the bank, never sell anything you do not know.
Drawing inspiration from small private banks’ business models, established in foreign countries and with a hundred years of tradition, Banco Carregosa considers its independency and personalisation as its two main advantages which differentiate it from private banking services offered by most banks in the market. There is a clear conflict of interest between commercial and private banking. As Banco Carregosa has no stake in listed companies nor operates in the retail segment, it’s easier to ensure greater independency.
Another golden rule is personalisation: to provide services of excellence, a private banker should not have more than 30 clients. It is not an option but a management imposition.
With a conservative management, and a small but strong group of shareholders, stability is a huge advantage.
As the directors hold a majority stake of the bank’s equity, their interests are aligned with the long-term performance of the bank, and thus they are free from short-term pressures to deliver immediate results that could endanger the long-term prospects of the bank.
That’s why Banco Carregosa is so proud of being one of the most capitalised banks in the industry, with a 30 percent core tier one capital ratio. And yet, the best quarter ever came in early 2012. But this is just the beginning. For the near future, the opening of an office in Sao Paulo, Brazil, will be the next stop.
But there are some concerning issues – the biggest of all is the Portuguese macroeconomic scenario, with a 15 percent unemployment rate, no growth ahead and a public debt of 120 percent GDP. And now, all eyes lie on neighbouring Spain, the main destination of Portuguese exports.
At the bank’s presentation, in 2009, Chairwoman Maria Cândida Rocha e Silva praised the history as the oldest Iberian financial institution. “Carregosa always carried out its activity in the financial arena. If, throughout wars and revolutions, the institution kept its presence in the market was because it managed to retain its good name and preserved our clients’ trust. I think we have learned a great deal with this crisis. All crises were, with no exception, excellent buying moments. More than potentiating soaring profits, we are focused in protecting our clients’ wealth.”