Bank expands while staying true to its roots
MUTUAL RESPECT PORTUGAL HAS ONE OF THE BEST PRIVATE SAVINGS RECORDS IN EUROPE. CAIXA ECONOMICA MONTEPIO GERAL, ITS OLDEST FINANCIAL INSTITUTION, IS LOOKING TO THE FUTURE BUT REMAINS DEDICATED TO ITS ORIGINAL PURPOSE

WIDER INTEREST Caixa Económica Montepío Geral has opened offices in several European countries

A COMPETITIVE financial institution with a fundamentally social purpose, the Caixa Económica Montepío Geral stands out as unique among Portugal’s banks.
What differentiates it is a firm commitment to the mutualist philosophy in which it has its roots. The Caixa Económica’s origins lie in the foundation more than 150 years ago of what has become Portugal’s most important mutualist institution.
Montepío Geral began operating in 1840. Four years later, its directors founded the Caixa Ecónomica (Savings Bank) and it quickly became an essential instrument of the association, developing its banking activities and earning the funds the association needed.
“We are the oldest financial institution in Portugal,” says António de Seixas da Costa Leal, Montepío Geral’s Chairman. “We are even older than the Central Bank.”

Today, the institution has more than 300 branches and is rated sixth in the banking sector, with an overall market share of around 5.5 percent. “We are the biggest of the small banks, and the second biggest of the totally Portuguese institutions,” says Dr. De Seixas da Costa Leal.
The revenue from all its activities is used to improve and broaden benefits to Montepío Geral’s members. It also supports various social entities and projects in the areas of health, education and the arts.

“We are very different from other banks—we have no shareholders, no social capital—but we compete with them,” says Dr. De Seixas da Costa Leal. “In a competitive environment, extending our capacity to serve the social economy requires us to adopt strategies geared towards competitiveness and profitability.”

ANTONIO DE SEIXAS DA COSTA LEAL Chairman of Montepío Geral

Private individuals make up the majority of the bank’s clients and a substantial proportion of its loans are for mortgages and construction. “We are the biggest when it comes to housing loans—60 percent of our customer credit is for housing purposes,” he says. Recently, it has increased its focus on the corporate market—with considerable success. Lending to companies now accounts for around 33 percent of loans made by the bank.
An important stage in the Caixa Ecónomica’s evolution came with the removal several years ago of restrictions limiting its operations.

“We were authorized by the Central Bank to perform all the activities granted to the portuguese banking system and thus allowed to operate like any other bank,” says Dr. De Seixas da Costa Leal.
“Up to that time, we were limited to the national territory and unable to operate in foreign countries. Now we are an international small bank and have opened agencies in Paris, Geneva, Frankfurt and London.”
The Caixa Ecónomica now participates in financial operations in Portuguese-speaking countries, such as Mozambique and Guinea Bissau, and has decided to finance its expansion through international capital markets.
Currently devoting the three-year period 2001-2003 to consolidation and development, the bank remains true to its mission to transform “each customer into a member and each member into a customer.”
“We aim to affirm mutualism as an appropriate response to the challenges and some of the problems of society,” says Dr. De Seixas da Costa Leal. “We do not want to be the biggest, but we want to be the best at what we do.”
A portfolio of investments in areas such as insurance, asset management and real estate helps Montepío Geral to diversify and complement its services.

In 1986, it established Lusitania Companhia de Seguros, the first private insurance company to be founded with totally Portuguese capital since 1947. Over the past ten years, Lusitania has acquired the business operations in Portugal of the Swiss firm Baloise, and British companies Pearl, Guardian and Royal & Sun Alliance.
“We complement Montepío Geral in the insurance field,” says José António de Arez Romão, General Manager and Chief Executive Officer. “Lusitania is directed at the Portuguese market where we show competitive advantages as a result of our knowledge of the country and our strongly personalized service.
“We also support the local interests of Portuguese enterprises established in Portuguese-speaking countries.”
Like other Portuguese insurers, he believes health insurance represents the most important opportunity for business development over the next 10 years.

“It is possible that insurance activity will partially substitute for the state in this area,” he says. “We will certainly launch new products in the health and life insurance areas.”