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Banks in a quandary in Angola

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Banking: Angola demands a 50% share

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Angola, once a Cuban-backed Marxist fiefdom butnow a nominally multiparty democracy, appears to bepushing for a takeover of Portuguese banks in the oil-rich territory. Expresso newspaper June 16 says one infive Portuguese banks incorporated in the former colonyis under pressure from Luanda to sell up to 50% ofissued capital to Angolan investors. The report says thePortuguese banks have been taken by surprise at thesize of equity share being demanded. BCP and BPIbanks have both earlier considered floating portions ofthe capital of local operations on the Angolan stockmarket. 20% of BES equity is already in Angolan hands.CGD-Caixa Geral de Depositos has been waiting for thepast twelve months for central bank authorisation toacquire that portion of equity held by Santander in itsbank in Angola. Luanda has said authorisation willdepend on the sale of 49% of CGD (Portugal, stateowned) to Angolan investors. Officially all Portuguesebanks are playing down the pressure, but some haveadmitted they will pull out if the Angolan governmentinsists on this level of control. Finibanco announced theestablishment of a bank in Angola which is 60%-held byPortuguese investors and 31.5% by Angolan partnersmuch of this with the Gema Group. Finibanco hasrefused to bow to Luanda's pressure and said that it wasits own decision to invite Angolan partners to join thebusiness. Portuguese sources believe that the demandsfor opening up capital of banking operations in Angolareflect the increased financial capacity among localprivate investors seeking to diversify, rather than ameasure specifically aimed at damaging Portugueseinterests in the country. Among the four largest banks inthe Angolan financial system only one, Banco deFomento de Angola (BFA) controlled by Portugal’s BPIhas no Angolan investors. Among BIC’s stakeholdersare Américo Amorim (Portugal, cork) and Isabel dosSantos, daughter of Angolan president Eduardo dosSantos. BPC is a state bank and BAI has private localinvestors. Among the mid-range five banks only BCPand Totta have not sold any of their capital to localinterests. 20% of BESA (Banco Espírito Santo deAngola) capital is in Angolan hands. BCI is Angolanstate-owned and BCA is a Barclays/local investor jointventure. BCP chairman Paulo Teixeira Pinto said hisbank would be the first to be quoted on the plannedAngolan stockmarket and open up capital to localinvestors. However all Portuguese banks are reluctantto accept that 50% of their equity should be in Angolanhands. One Portuguese bank chairman speakinganonymously said: "We must have at the very minimum50% + 1 share in our Angola operations less is of nointerest and we would withdraw from the market”. Thechairman of another Portuguese bank in Angola said:"the initial intention is neither sensible nor balanced butthe final outcome will be both sensible and balanced”.The bankers seem to believe that the 50% demand isnot a diktat but a negotiating position by the Angolanauthorities. Fernando Ulrich, chairman of BPI, said hehad been in Angolan early in June and had discussionswith the authorities. "This is a story that will end well forall," he insisted. The Angolan ruling elite is howevermired in corruption. According to the InternationalMonetary Fund, some £3 billion of oil revenues havedisappeared in the last five years into a "BermudaTriangle" operated by the presidency, the state bankand the state oil company. Seller beware.

Investment: Chinese interest in Beja airport site

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The Beja municipality and Empresa deDesenvolvimento do Aeroporto de Beja, the companydeveloping Beja airport, say they have had an initialapproach from the Associação da Indústria e doComércio de China em Portugal (AICCP), the China-Portugal chamber of commerce, about a possibleChinese investment in a 50ha site for an assembly linenear the airport. The project would be for the assemblyof Chinese manufactured motorcycles and white goodsfor export to European markets. According to MiguelQuaresma of Beja local authority, nothing concrete hasyet surfaced apart from an expression of interest whichis being pursued. AICCP said Chinese interest lies insetting up in a business park which could develop into a

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logistics platform to assemble and adapt Chinese goods – incorporating some local R&D – for the EU market.Similar developments have occurred in Madrid andBarcelona. Miguel Quaresma warns that assemblyplants would only be authorized if they employed localrather than imported Chinese labour.

Technology: Virtual reality opportunity for SMEs

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The Visionarium, Europarque in northern Portugalcould be turned into a virtual reality plant hosting the firstPortuguese Interactive Technology Complex, aninvestment of some

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8 million, says a June 16 report.The complex will be developed by Insize, a venture thatpartners with an international consortium led by EONReality (US). EON is world software leader in managinginteractive visual content installed in universities andresearch centres. The unique selling point of theplanned investment is that it makes available to smalland medium sized enterprise a facility currently theexpensive domain of big multinationals. Manufacturerssuch as BMW have for instance abandoned crashtesting in favour of immersive virtual reality for validatingtheir safety criteria. Insize will make these outsourcedtools available to SMEs for 5-dimensional testing anddevelopment helping upgrade the value chain for thesefirms. João Vieira, driving force behind Insize says:"This is a pioneering initiative which will allow for thephysical experience of any project or environmentbefore it is actually created”. João Vieira, an immersiveenvironments architect, has just returned from Californiawhere he finalized the US partnership. Three years agohis idea won a prize from the Portuguese InnovationAgency. It was also selected by IAPMEI (the SMEsupport agency) for the Empreenda-Projectofiveprogramme under the Portuguese Technology Plan. Theinvestors have attracted funding and support afteridentifying Visionarium as the ideal environment for theproject.

Agriculture: Frulact aims to be European player

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Frulact (Tortosendo, Covilhã , north) has opened a

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12.5 million fruit processing plant with a 40 ton annualcapacity, doubling current output to meet growing exportdemand, particularly in France where it supplies the milkfood, ice cream and pastry processing markets. Frulactestablished in 1987, aims to become a European playerin the fruit processing industry, says João Miranda, itsmanaging director. The company currently ranks asIberian leader in its market and has set upmanufacturing plants in Morocco, Tunisia and Franceand currently exports fruit-based preparations under 800different brands to Libya, Egypt, Iran and the UnitedArab Emirates. The new plant at Parkurbis TechnologyPark will be followed by further investments of

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5 millionin Morocco and Algeria. From its base in France whereacquired Granger Bouguet Pau at Vichy, the company isdriving its European expansion into Italy, Belgium andSwitzerland. It plans to extend sales into EasternEurope from Vichy. But the core of its operationsremains Portugal-based. João Miranda says the lifecycle of products is getting shorter and today lasts nolonger than two years. He said brands at the end of theirlife account for sales losses of 10-12%. “Our biggestchallenge is to influence and anticipate market trendsand create added value through innovation,” he said.Frulact imports 90% of its raw material from Spain,Morocco, Poland, Chile, India, South Africa andThailand. He said a kilo of pitted, frozen cherries fromSerbia including transport cost is still cheaper thanacquiring fresh cherries in Portugal. Profile: Fruit basedpreparations for the food industry; Turnover:

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40million/year; 90% exported; Head office: Tortosendo,Covilhã; New products: 150 in 3 years; Investment inR&D: 3.5% of sales; Capacity: 65 tonnes; Annualaverage growth: 20%.

Labour: White Paper ready for consultations

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According to a June 13 report, the committeeresponsible for drawing up the White Paper on LabourRelations has delivered its findings to Jose Vieira daSilva, Minister for Labour and Social Solidarity who willshortly put the document up for public consultation.Guidelines in the White Paper could result in substantiallabour law changes along the lines of a model thatappeals for closer relationships between the businessworld and trades unions. The White Paper will attemptto ensure that working hours, contract regulations andhiring and firing are decided on a bilateral basis – apractice already in place in companies such asAutoEuropa. The White Paper fails to discuss the“flexigurança” option a Danish inspired model whichcombines greater hiring and firing flexibility withimproved unemployment protection. “Flexigurança” isvery expensive to run. According to José Carlos PintoCoelho of Confederação do Turismo, the tourismconfederation: " Among EU member states, Portugal isfar and away the country with the least flexible labourregulations. The tourism sector needs more staff butcompanies are afraid to hire", he said. He urged morecontract flexibility. "A receptionist should be allowed andable to work behind the bar and vice versa dependingon the seasons. We also believe that any incompatibilitybetween management and staff should lead to individualnot collective dismissals”.

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