Montepio. At election time

Virgílio Lima's list will face competition in the race for the Assembly of Representatives in the upcoming elections of the Montepio Geral Mutualist Association (AMMG), which will be held in December, Nascer do SOL has learned. The deadline for submitting applications is September 15th, but our newspaper understands that an opposition list is being prepared "which will include a large number of members who do not agree with the current executive committee's strategy." Eugénio Rosa, who has been one of the faces of the opposition and has been highly critical of the current administration's work, chose not to stand, but "this opposition work will continue to be carried out by other members," sources close to the process admit.

Contacted by Nascer do SOL, the entity led by Virgílio Lima declined to comment on the election process or who might run.

It should be remembered that the Assembly of Representatives has 30 members elected proportionally (d'Hondt method) and it is there that fundamental documents of the entity's life are debated and voted on, namely the budget and annual accounts, activity plans, statutory amendments, among others, functioning as a kind of 'assembly' of the members, since it is the body responsible for monitoring and legitimizing the management's decisions.

Regarding the board of directors and fiscal council, as Nascer do SOL has already reported, there will be a single list led by Virgílio Lima. The current face of the Associação Mutualista Montepio Geral was re-elected in 2021, having assumed leadership of the group in 2019 following the departure of Tomás Correia.

Sources linked to the association's movement told our newspaper that this 'lack' of interest in the board elections is due to the changes that resulted from the implementation of the mutual association code, which abolished general assemblies. "Until now, two general assemblies were held, that is, two meetings per year: one in December to define the budget and action plan and another in March to approve the accounts. These were always opportunities for members to express their opinions regarding the association," they emphasize.

On the other hand, the new mutualist code, approved in 2018, requires candidates to be subject to prior registration with the ASF (Insurance and Pension Funds Supervisory Authority).

Profits have risen

It is true that the Mutualist Association has been increasing its results, a trend that has continued since 2021. The latest financial statements, for 2024, indicate profits of €210 million, an 87.5% increase over the previous year. The Mutualist Association explains these figures by the "favorable contribution" of the Montepio group companies, which, "by presenting significant positive results for the fourth consecutive year, once again increased their market value and distributed dividends, thus contributing to the increase in MGAM's results."

The number of members also increased slightly, closing with a total of 610,181, a figure that compares with 604,799 at the end of 2023, translating into an increase of 5,382 members (0.9%), still far from the 632,931 that existed in 2015, before the separation of the brands (bank versus Mutualista).

Of this total, more than 75,000 are over 70 years old, almost 10,000 are over 85 years old and more than 3,300 are over 90 years old. The vast majority are centered in the age groups of 41/65 years old (283,436) and 26/40 years old (107,587).

However, one of the headaches concerns the composition of the association's balance sheet, which has €943 million in unpaid tax assets – a figure that has been increasing since 2020, when it totaled €867 million. This situation has been prompting warnings from the association's own auditor, PwC, which warns that the bank may be overvalued and, as such, the Mutualist Association may not recover its investment, since its recovery must be "assessed based on the achievement of taxable income, which should be projected excluding the taxable components arising from deductible temporary differences."

The warnings don't stop there. "Based on the projections presented by the board of directors and the conditions set forth in the aforementioned standard, and also considering that dividends and reversals of future impairments related to financial holdings held in subsidiaries do not contribute to the determination of its taxable profit, despite the lack of a time limit for the recovery of tax losses, the entity does not demonstrate, in our opinion, the capacity to generate sufficient taxable income to allow the recovery of a substantial portion of the recorded deferred tax assets," the auditor states in its opinion on last year's accounts.

And it adds: "The deferred tax assets, equity and net profit for the year, as set out in the Entity's balance sheet and income statement as at 31 December 2024 and 31 December 2023, are overstated by an immaterially relevant amount, the magnitude of which we are not in a position to quantify, given the uncertainty inherent in the projections of taxable profits."

Banco Montepio—one of Mutualista's main companies—reported profits of €70.7 million in the first half of the year, a 2.8% increase compared to the same period last year, setting a new all-time half-year high. By 2024, it had nearly doubled its profits, reaching €110 million.

Remuneration under fire

These results are unconvincing for Eugénio Rosa, considering the compensation paid to the boards of directors of both entities. "In just two years, Banco Montepio paid €8,443,771 million to its board members, a huge amount for the size of the bank, which is small. CGD, which is five times larger, has only eight executive members, while Banco Montepio has six. Non-executive members earn €49,000 per year, while the chairman receives €1,529,861 per year," he reveals.

These payments must also be added to retirement pensions, which are calculated based on a percentage of 4% or 5% for each full year of office. Eugénio Rosa gives examples: "Pedro Leitão's administration completed five years in 2024, so each of its members is entitled to a pension ranging from €7,342 (president) to €2,768 (non-executive director), and for each additional year, 5% of the remuneration is added to the pension," noting that "the board of directors does not deduct anything from this pension, and it is fully covered by the bank." And he doesn't hesitate: "It cannot be said that Banco Montepio doesn't pay its directors handsomely."

These figures are unjustifiable given the results, argues the economist, who compares the profits with those reported by Crédito Agrícola, which has characteristics and dimensions more similar to Montepio than other commercial banks. In five years—from 2020 to 2024—according to Eugénio Rosa's accounts, Banco Montepio posted profits of just over 100 million euros, while Crédito Agrícola's profits were 1.125 billion euros.

The economist also laments the amount of credit granted by Montepio compared to that of Crédito Agrícola. "If we consider only the period of Pedro Leitão's administration, Montepio's credit increased by only 3.4% (+394 million euros), while that granted by Crédito Agrícola, in the same period, increased by 13.1% (+1.368 million euros), or four times more," he points out.

The same scenario is repeated at the Mutualist Association, with the economist drawing attention to the fact that administrators are receiving monthly salaries of between 26 and 30 thousand euros, in addition to "the privilege of golden pensions" in the same modalities practiced by the financial institution.

Also on this matter, the Mutualist Association declined to comment.