A Portuguese Church commission has blasted bonuses to bankers during COVID-19, insisting that “not everything that is legal is legitimate”.
– Novo Banco: €2 million in bonuses, €1 billion in losses
The Portuguese National Justice and Peace Commission (CNJP) sent out a strongly-worded press release May 25 in response to the news that Novo Banco is planning on rewarding its directors with €2 million in bonuses in the midst of the ongoing health, economic and social effects of the coronavirus.
Novo Banco was established in 2014 by the Bank of Portugal in order to rescue the “good” assets of the Banco Espírito Santo, which collapsed under the weight of the global financial crisis.
However, in order to stay afloat, Novo Banco has to date received over €5 billion in tax payer money, including a new tranche of State funding which the bank received earlier this month, to the tune of €850 million.
With the bonuses, Novo Banco is planning on rewarding its executives for their performance in 2019: precisely the year in which the bank recorded a loss of just over a billion euros.
– “Perplexity and scandal”
In its press release Monday, the CNJP hit out at Novo Banco’s plans without directly mentioning that institution.
The Church body – affiliated with the Portuguese Bishops, and comprised by laypeople – said that “the news that a private bank – whose survival has been ensured thanks to large state funds that end up burdening all taxpayers – is contemplating the possibility of awarding management bonuses that, in their sheer magnitude, clash with the disparity of wages in Portugal (although contractually foreseen and ‘due’ for the achievement of objectives), causes perplexity and scandal”.
The CNJP added that the situation in Novo Banco “and similar situations in terms of remunerations policy or dividend distribution by banks (also provided for by exceptional state benefits) or other companies are in stark contrast with the solidarity efforts that the current situation calls for”.
“We must bear in mind that not everything that is legal is legitimate. And it must be demonstrated that corporate social responsibility has demands for coherence and must not be confused with a simple image promotion tool”, the CNJP wrote.
Turning to the words of Pope Francis in his extraordinary Urbi et orbi blessing March 27 – that “we are all in the same boat”, and “no one reaches salvation by themselves” – the CNJP insisted that “social cohesion is necessary today more than ever”, and that “only a fair sharing of the efforts required of us guarantees this cohesion”.
Elsewhere in its press release yesterday, the CNJP warned of an “economic and social crisis of unprecedented gravity” in Portugal and around the world, and lamented that “for many, this crisis translates into unemployment, a total or very substantial loss of income and the deprivation of basic needs such as food”.
“The inequalities that already marked our society tend to worsen because, as several studies show, it is the poorest who, in general, suffer most from this crisis”, the CNJP added.
“The crisis does not affect everyone equally and there are those who do not suffer substantial losses of income. These are asked for an effort of solidarity, also unprecedented, in order to lessen the effects” of the crisis, the Portuguese Church body urged.