November 28, 2016 / 11:05 AM / a year ago

Portugal state bank's top brass resign after asset disclosure row

LISBON, Nov 28 (Reuters) - The recently appointed chief executive and six board members of Portugal’s state-owned bank Caixa Geral de Depositos (CGD) have resigned, the government said on Monday, potentially delaying a 5 billion euro ($5.3 billion) recapitalisation of the ailing bank.

The resignations follow a court demand that the management team, which took over in late August, declare their incomes and assets. The team argued that their contracts included a waiver of such disclosures, and refused to budge.

CGD is the country’s largest bank by assets and its problems have contributed to the general weakness of Portugal’s banking sector, which is still reeling from two bank rescues in 2014 and 2015 that have undermined investor confidence.

Portuguese President Marcelo Rebelo de Sousa earlier this month urged the board to declare their incomes and assets “in the name of transparency and to uphold the national interest”.

In a statement, the finance ministry said it regretted the decision by the CEO, Antonio Domingues, to step down. Domingues, who had previously served as a board member at Banco BPI , was not available for comment.

The ministry said the resignation would take effect at the end of the year. A new candidate would be nominated very soon for the role of president of the executive board “to give continuity to the business plan and the recapitalisation already approved”.

The European Commission and Portugal reached an agreement in August on recapitalising CGD, which has been plagued by massive bad loans. The plan includes a direct injection of up to 2.7 billion euros by the state and the issuing of 1 billion euros in bonds by CGD, with the rest to come from other equity and debt mechanisms.

The government has said it expects to carry out the injection in the first quarter of next year, when CGD would also issue the first 500 million euros worth of bonds. ($1 = 0.9404 euros) (Reporting by Andrei Khalip; Editing by Mark Trevelyan)

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