The management of Banco Montepio will propose to the general meeting to reduce the capital of the institution by half, from 2.42 billion euros to 1.21 billion euros.
The decrease will be made by a 50% reduction in the par value of each share, which will go from 1 euro to 0.5 euro.
In a statement sent to CMVM, the bank led by Pedro Leitão wrote that “despite the positive net results obtained in the past fiscal year, in view of the presence of negative accumulated retained earnings, […] It was appropriate to submit for the approval of the General Assembly the capital reduction process […]With a view to enhancing negative retained earnings coverage with a total amount of €1,174,686,582.37.
“By restating the equity titles, negative retained earnings will be fully covered by the reduction of capital, allowing the level of regulatory eligible funds to be enhanced as distributable, which will allow the creation of necessary and sufficient funds the company may, when practicable in light of the measures imposed by Superintendent and decided by its contributors, to proceed with the distribution of the results,” the statement reads.
The bank also reports that “the proposed adjustment through the consolidation of retained earnings will not have any impact on shareholders’ equity or capital ratios, so the solvency indicators of Banco Montebio will not change in any way.”
Once the process is complete, the net worth of the enterprise will exceed the new share capital by 24.8%, i.e. by more than 20%, with a consequent decrease in the ratio between share capital and the number of shares issued.
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