01
Profile of
the Crédito
Agrícola
Financial
Group
Annual Report 2009 - Consolidated
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PROFILE OF THE CRÉDITO
AGRÍCOLA FINANCIAL GROUP
1. CAIXA CENTRAL GOVERNING BODIES
BOARD OF THE ANNUAL GENERAL MEETING
Caixa de Crédito Agrícola Mútuo de Terras de Viriato
Chairman
Nuno Carlos Ferreira Carrilho
Caixa de Crédito Agrícola Mútuo de Cantanhede e Mira
Deputy Chairman
Carlos Alberto Pereira Martins
Caixa de Crédito Agrícola Mútuo de Bairrada e Aguieira
Secretary
João Batista Moreira Peres
SENIOR AND SUPERVISORY BOARD
Caixa de Crédito Agrícola Mútuo de Pombal
Chairman
Carlos Alberto Courelas
Caixa de Crédito Agrícola Mútuo dos Açores
Francisco Amâncio Oliveira Macedo
Caixa de Crédito Agrícola Mútuo de Baixo Mondego
António João Mota Cachulo da Trindade
Caixa de Crédito Agrícola Mútuo de Guadiana Interior
José Artur Palma Estrela
Caixa de Crédito Agrícola Mútuo de Porto de Mós
Jorge Manuel da Piedade Volante
Caixa de Crédito Agrícola Mútuo de Região do Fundão e Sabugal
João Fernandes Chendo
Caixa de Crédito Agrícola Mútuo de S. Teotónio
António Manuel Nobre Louçã
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PROFILE OF THE CRÉDITO
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Caixa de Crédito Agrícola Mútuo de Sotavento Algarvio
João Lázaro da Cruz Barrote
Caixa de Crédito Agrícola Mútuo de Vale do Sousa e Baixo Tâmega
Henrique Vasconcelos Teixeira
EXECUTIVE BOARD
Chairman
João António Morais da Costa Pinto
Member
Licínio Manuel Prata Pina
Member
Renato Manuel Ferreira Feitor
Member
José Fernando Maia Alexandre
Member
Maria Júlia de Almeida Rocha
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PROFILE OF THE CRÉDITO
AGRÍCOLA FINANCIAL GROUP
CHARTERED ACCOUNTANT
Deloitte e Associados, S.R.O.C., S.A.
Represented by Luís Augusto Gonçalves Magalhães
ADVISORY BOARD
Caixa de Crédito Agrícola Mútuo de Baixo Vouga
Chairman
José Luís Sereno Gomes Quaresma
Caixa de Crédito Agrícola Mútuo de Albufeira
João Manuel Correia da Saúde
Caixa de Crédito Agrícola Mútuo de Alenquer
Hélio José de Lemos Rosa
Caixa de Crédito Agrícola Mútuo de Batalha
João Afonso Marto Ramos
Caixa de Crédito Agrícola Mútuo de Beja e Mértola
Francisco José Salgueiro Correia
Caixa de Crédito Agrícola Mútuo de Douro, Corgo e Tâmega
Alcino Pinto dos Santos Sanfins
Caixa de Crédito Agrícola Mútuo de Lourinhã
António Augusto Nascimento Mateus
Caixa de Crédito Agrícola Mútuo de Ribatejo Norte
Arnaldo Filipe Rodrigues Santos
Caixa de Crédito Agrícola Mútuo de Zona do Pinhal
Ângelo de Jesus Antunes
Co-opted under the terms of clause 2 article 35 of the Caixa Central statutes
Adriano Augusto Diegues
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PROFILE OF THE CRÉDITO
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2. ORGANIGRAM OF THE GROUP
SICAM
CAIXAS ASSOCIADAS
100.00%
CAIXA CENTRAL
32.64%
CA VIDA
57.28%
10.00%
0.68%
CA SEGUROS
96.72%
100.00%
CA CONSULT
100.00%
100.00%
CA GEST
100.00%
CRÉDITO AGRÍCOLA
S.G.P.S.
CA IMÓVEIS
79.20%
CA INFORMÁTICA
20.25%
2.58%
84.68%
0.37%
12.34%
CA SERVIÇOS
100.00%
100.00%
CCCAM SGPS
Unipessoal Lda.
CA FINANCE
100.00%
RURAL RENT
1.10%
(1)
66.67%
30.00%
26.05%
0.10%
FENACAM
23.79%
27.78%
8.09%
100.00%
5.85%
92.16%
AGROCAPITAL
SCR
FIQ
CENTRAL FRIE
FCR INOVCAPITAL
GLOBAL 2
FIQ
AGROCAPITAL 1
FII CA
IMOBILIÁRIO
FII CA
PATRIMÓNIO
CRESCENTE
FII CA
ARRENDAMENTO
HABITACIONAL
3.33%
7.84%
(1) Fenacam holds 98.78% of its own capital; total Group 99.98%
Full Consolidation
As at 31/12/2009
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PROFILE OF THE CRÉDITO
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3. THE MAIN FEATURES OF GROUP OPERATIONS
During the year, the operations of the Crédito Agrícola were carried out in a markedly dismal
macroeconomic climate, characterized by a considerable fall in economic activity, a major
impact on the business fabric and the rise in unemployment to historic highs.
The following are the salient points in Group operations over the year, to be read in conjunction
with the financial and business analyses also detailed in this report.
Institutional, Organizational and Technological Development
The modernization programme has included a range of initiatives that have aimed at ensuring
the Group’s readiness for increased demands in regulations, improved effectiveness and
productivity, and the reining in of operational costs.
In terms of business and efficiency (the Plano de Negócios e Eficiência), one of the highlights
is the new functionalities in Internet Banking that have come on stream for company clients.
The model to automate the related platform and document management has been defined and
the infrastructure will be up and running during 2010.
Mergers between Caixas continued during the year, as a vehicle for economic and financial
consolidation and the structural overhaul of SICAM. There were three mergers completed,
bringing the number of Caixas down to 88.
Commercial support is being provided for the Caixas which are participating in a project to
bring an extra dynamic approach to business (known as AND), with the following initiatives
undertaken: monitoring attainment of objectives and local planning, and management of
commercial operations; support for the definition of commercial objectives per individual
Caixa and branch; development of commercial action plans; support in preparing and carrying
out marketing campaigns, commercial campaigns and local activities; and implementation of
the proactive commercial management scheme (Gestão Comercial Proactiva).
A plan was initiated during the year to provide SICAM with management tools supported
on Workflow and Document Management technologies. The automated platform includes
components that are procedural (improved practices and recommendations on processes),
organizational (functions and rules on segregation, methodologies for operational management
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of working groups) and technological (workflow systems and digitalized document handling).
Work continued on the organizational platform, the main aims for the year being to systematize
risk management practices and prioritise areas for adopting the automated platform. The aim of
this platform is to create a reference point for best practices and recommendations that can be
applied to the various aspects of Caixa operations, including business and support procedures
in line with the technological, organizational and methodological tools available in SICAM.
In the first half of the year, the compliance expansion project was well under way. Individuals
were selected in all the Caixas Agrícolas and in various areas of the Caixa Central, their mission
being to ensure that operations are carried out in conformity with legislation on regulations in
force and that best practices are in place for analysis and control of the risks associated with
compliance. With this in mind, there were training courses for all the compliance monitors in
the Caixas Agrícolas and in the Caixa Central.
In March, the DFOA On line application was made available for al users in the associated
Caixas. This is a platform which brings together the data base created by the information
infrastructure for management of Ruris+, integrated with the existing data base and providing
the wherewithal for each Caixa to undertake economic and financial analysis in due time for a
wide range of management indicators while using relevant accounting ledger data.
The new application for branches, SIBAL, which is being developed through CA Serviços,
reached its final stages, with quality control tests undertaken in a pilot scheme in the Caixas of
Loures, Sintra and Litoral (15 branches).
The e-learning platform of the Crédito Agrícola (Sal@ctiva) was finalized and came on stream
during the year, with a course completely structured in-house, and 1,170 participants.
The documentation for accreditation of the Caixa Central as a training unit was handed in to
the relevant authority (the Direcção Geral para o Emprego e Relações de Trabalho – DGERT).
During the year, the multipurpose project (Projecto Multifuncional) was started up. The aim
is to lead to a better understanding of what happens in the office and the working procedures
involved. This should lead to an increase in efficiency, an improvement in productivity, reduction
and control of costs, and a contribution towards simplifying business support operations.
The project was successfully piloted in the building in Rua do Castilho and then extended
to other buildings, and to some of the associated Caixas.
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As part of the expansion of the Crédito Agrícola “reference branch”, the model for use in
the Caixas was made available via the Group’s intranet, with technical support, the supply
of services within the scope of the projects focusing on its architecture and its management
consultancy and job coordination features.
The Asset and Liabilities Managements function (ALM) was finalized during the year. The
management committee for this area (ALCO) was centred above all on the development
of solutions that could help minimize the impact of the dismal state of the markets on the
financial margin of the Caixa Central and SICAM. Against a backdrop of great uncertainty,
various operations were slotted into place to enhance management and defence of liquidity in
the Group.
A special mechanism was devised to cover term deposits from Caixas placed at the Caixa
Central. The product was monitored and there were adaptations to concrete situations
presented by the Caixas, with control and report mechanisms.
The IT platform developed by CA Seguros for the distribution of structured deposits was
upgraded. This was to cover specific requirements and make its use more flexible. The upgrade
involves automatic production of documentation, and more flexible cover, along with a new
contract focused on attracting and retaining deposits.
There was proactive support for the Crédito Agrícola auditors, involving on-going assessment
of the committee for auditing and internal control and a programme of events to foster and
develop skills and strengthen team spirit among them.
Image, Awareness-Raising and Business Promotion
The Crédito Agrícola hosted the meeting of the Executive Committee of the European
Association of Cooperative Banks in Lisbon at the start of June. A large number of banks
took part, including institutions that carry great weight in the European banking system. The
Governor of the Banco de Portugal delivered an important address during the work of the
committee.
In terms of image and marketing, the Group shifted its position and its focus during the year,
putting forward a new campaign for savings.
The new logo, “Together we are more. Since 1911” (Juntos somos mais. Desde 1911), mirrors
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the distinctive positioning of the Crédito Agrícola, where values for mutual help and solidarity
are summed up in one expression: the cooperative spirit.
The actress Silvia Alberto was again featured on the advertising campaign for the new CA
savings schemes (Depósitos a Prazo L, XL and XXL, Contas Super Depósito Crescente and
Super Depósito Crescente Mais, Poupança CA Aforro and Poupança Máxima tradição). The aim
was to put across the image of a modern, human institution, with a relevant position in today’s
market, and able to satisfy the needs of existing and potential customers. The new products
detailed above, with specific cover portfolio management, were geared to raising funds with
the offer of particularly attractive conditions.
On the marketing side, one highly relevant operation was the sponsoring of a television
programme, “CA – Minuto de economia 2009”, which presented up-to-date financial and
economic information in a distinctive format.
New products were also created in the area of disintermediation. Among them were Euribor
II, a special open investment fund, the Fundo de Investimento aberto CA Saúde Valorização
a 4 anos, a 4-year open investment fund and the CA PPR, a medium to long-term savings plan
to cover supplementary pension income.
In terms of credit, the following products were created: mortgage credit for the unemployed,
which is a special credit line made available by the State (covered by Decree Law 103/2009),
and the housing credit Fundo Investimento Imobiliário, which is a medium to long-term loan
for purchasing, building and exchanging property available through the FII CA.
Also on the credit side, the Crédito Agrícola, through the Caixa Central, signed up to a protocol
with IAPMEI (the support service for small and medium sized enterprises).
There were innovations and improvements introduced in specific areas to provide a response to
greater demand and the need to increase the number of products available. These included: a
boost to operations involving credit recovery using the direct line service, overhaul of the contents
on the CA site, the insertion of an additional security level in the on-line channel (known as Sistema
de Autenticação Forte – SAF) and the launch of a pilot scheme based on an innovative concept, the
CA banking kiosk (Qiosque bancário CA). The project was presented at the 28th Crédito Agrícola
meeting in Vila Real and was a response to the need for a space where no CA branches exist, for
the provision of services and financial solutions available for existing and potential customers.
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The Crédito Agrícola signed a protocol with the Portuguese state, through the Ministry of
Finance and the Ministry of the Economy, as part of the national plan for energy efficiency
(Portugal Eficiência 2015). The aim of this was to provide special financing conditions for
individuals wishing to purchase thermal solar panels.
In the second quarter of the year, a new product was launched, the “Leasing em Consórcio”
(Leasing through a consortium), which enables a large number of Caixas to provide finance
for customers wishing to purchase property. It gives the advantage of a real guarantee, since
instead of a mortgage, the Caixa holds the property, in proportion to the amount that has been
financed.
Another point worth highlighting is the growth of commercial paper issuance with specific
placements. There were six of these during the year, totaling 80.5 million euros.
In terms of electronic means of payment, a number of highly profitable products and services
were introduced, giving a boost to cross-selling and to customer loyalty. Among these were
CA&Companhia, Pharma+, Business, and Piloto Contactless, all of which put across a modern
image through the introduction of new technologies applied to means of payment. The Risco II
product was concluded within the new credit recovery model, and there was a strengthening of
the infrastructures covering security and fraud detection.
Emphasis also continued to be given to products known as “Fora do Balanço” (Off-balancesheet), given their importance for bringing in commissions and playing a part in boosting the
complementary margin.
The expansion of the network of Caixa Central branches continued, and there are now nine in
Lisbon and Oporto. This has led to more penetration in these major urban centres.
There was a substantial increase in Caixa Central activity in specific markets, among them the
credit institutions’ debt market and repo operations.
The overall value of assets under management at CA Gest grew by a substantial 19.1%, higher
than the average across the system, where the figure stood at 11.5%. The amount topped
a thousand million euros for the first time. As in 2008, CA Gest moved up one notch in the
ranking of institutions providing invesment funds, to stand now in 11th place.
In May 2009, the Portuguese Consumers’ Association (DECO) carried out an analysis of
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the domestic market for financial products in its magazine “Dinheiro e Direitos”, where it
considered the CA Património Crescente product as one of the “right choices”, pointing out
that “it is the recommended fund for periods of more than two years.” In August, the business
newspaper Jornal de Negócios, in an article entitled “Invist como um milionário” (Invest as a
millionaire would) allocated 18% of the investment total in property funds and recommended
the CA Património Crescente as the best domestic property investment fund.
Regulatory framework
A number of actions were carried out with specific and direct reference to Basel II, among
them the enlargement of the compliance function in SICAM, devising and putting into place
the ICAAP framework (internal definition of capital requirements), definition of the disclosure
requirements, an integrated stress testing model, a framework for internal controls and related
documentation on risks and controls as well as backtesting for in-house models.
Other important steps taken were the creation of a central balance sheet for SICAM, the definition
of requirements for the new system of guarantee management, the project underpinning the
development of the infrastructure to support the risk function (to be put into place in 2010),
the opening up of functionalities that match systems and procedures with the DMIF (directive
on markets and financial instruments), and of a system for management of proposals and a
scoring model for credit cards and the reorganization of accounting procedures.
Faced with the changes brought in through Banco de Portugal Notice 8/2009, relating to
regulation of the pricing for customer products and services, it was essential to put together
a pricing scheme that would serve as a reference for SICAM and would include the range of
prices charged by Caixas. The new price list covers all the Caixas except for the CCAM of Costa
Verde and the CCAM of the Azores. The changes introduced towards the end of the year, among
them the updating of the prices for the most important commissions, are important to bring
the Group into line with current market practice, though they also reflect the specific nature of
the Crédito Agrícola.
There were a number of changes to the regulatory framework during the year, among them
in the area of market conduct, and they had an impact on the main areas of Crédito Agrícola
operations, and indeed on the banking system as a whole. It was also necessary to look into the
demands placed on the internal control system, a situation that meant a deep-seated revision
and update of internal norms, processes and procedures. This frequently impacted on the
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Group’s information systems, in areas such as credit, deposits and means of payment.
Caixa Central operations also continued to be impacted by the structural changes in the
European payment market stemming from SEPA, the Single Euro Payments Area. Among the
Group’s activity here was participation in the interbank committee for payment systems (CISP)
and in the European Association of Cooperative Banks (EACB), along with the monitoring of
actions being undertaken by the regulators, this through participation in VISA Portugal.
We are going through a period when institutions are investing more and more in sustainability
and social responsibility, with concern for the environment and society. In the light of this, the
Group started on a series of actions which led to the publication during the year of the first
annual sustainability report. The purpose of this report was to give the stakeholders and the
public in general information on the practices that the Group has put or intends to put in place in
terms of the environment, social affairs and governance, over and above what is required by law.
It is worth noting here that in the Banco de Portugal’s half-yearly report on market conduct
for 2009, the Crédito Agrícola is in almost all the fields one of the credit institutions with least
number of complaints (a situation that is common to other cooperative banks across Europe).
Own funds
Changes in the prudential regulations applicable to financial institutions required the Tier I
solvency ratio figure to be not less than 8% (recommended by the Banco de Portugal) and in
the light of this there was a special securities issue (Títulos Especiais de Investimento Tier
I – Caixa Central/2009), with total placement of 35,5 million euros. The issue was in line with
subordinated debt equivalent to Tier I, for an unspecified period, taken up entirely by associated
Caixas between September and November 2009.
Insurance operations
The Group has two insurers, CA Vida and CA Seguros. The first came in with net annual results
of 6,015 thousand euros and the second with 2,565 thousand euros.
In this particularly dismal economic climate, the life insurance market was down by 5.7% year on
year, but CA Vida reached its highest ever production figures, at around 207,990 thousand euros,
a 61% rise over a year earlier. For the first time, it took 8th place in the ranking of life insurers in
Portugal.
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CA Seguros in its turn celebrated its 15th anniversary and saw its performance recognized by
being elected best non-life insurer in its segment, for the second year running. This was in a
review carried out by the magazine Exame in its special edition for 2009, devoted to the biggest
and best enterprises in Portugal.
Other highlights
There were substantial changes introduced into the legal regime covering the Crédito Agrícola
(the Regime Jurídico do Crédito Agrícola Mútuo).
From the legal point of view, the aim of the revision was to bring the governance of the Caixas into
line with the provisions of the commercial code, without harming the cooperative spirit of SICAM.
Under the terms of this regime, the Caixas Agrícolas can carry out credit operations in areas that
are not designated as “agricultural credit operations” using up to 35% of their individual net assets.
This percentage can be raised to 50% on authorization by the Banco de Potugal.
In terms of auditing, it is now mandatory for Caixas to have their books audited by a chartered
accountant (revisor oficial de contas), who should also verify that they comply with legal and
regulatory norms that govern their activity, as well as the provisions set down in the general regime
for credit institutions and financial companies.
The stated purpose of the Caixa Central was also expanded so as to give it authorization to
undertake all operations allowed to banks in general. This authorization was complemented by the
requirement to increase minimum equity to 17.5 million euros, through Executive Order 746/2009
of 14 July. This does not, in fact, have any practical impact, since equity is way above this figure.
As for its functions as the central body in the SICAM structure, there is in the first place no longer
the demand for prior authorization from the Banco de Portugal for the Caixas to carry out certain
operations, including approval for setting up branches, which is now in the hands of the Caixa
Central. Along with intervention in these institutions, under the provisons of article 77-A of the
new statutes, there are stipulations on the appointment of interim boards, the right to suspend
governing bodies, inspections carried out through this intervention and the extension of these acts
for more than one year. The Banco de Portugal will continue to oversee the Caixa Central in its
remit, though this oversight will be on a control a posteriori.
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Moreover, any official opinion from the Caixa Central for the purposes of special register at the
Banco de Portugal of members of the governing bodies of the associated Caixas Agrícolas will
become binding. Unfavourable opinion will lead to immediate removal from the register.
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PROFILE OF THE CRÉDITO
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4. SICAM MAIN INDICATORS
SICAM Evolution
(In millions of euros)
2002 a)
2003 a)
2004 a)
2005 a)
2006 a)
Customer Deposits
6,863
7,181
7,599
8,174
Credit to Customers (net)
6,387
6,690
6,942
Net Assets
7,946
8,251
Operating Income
520.0
Financial Margin
Net Worth
Net Results
2007
2008
2009
8,671
9,158
9,613
10,070
7,290
7,464
7,467
8,373
8,859
8,696
9,319
10,044
10,566
11,447
12,097
569.7
656.9
738.1
828.2
873.6
979.1
999.7
306.5
305.7
315.9
325.8
351.7
387.1
403.2
315.2
370.4
376.3
396.1
403.7
423.6
486.2
513.0
423.7
33.1
80.6
89.9
86.8
95.6
113.3
121.1
42.3
120.7
52.4
Net Results GCA c)
Solvency Ratio - GCA (%)
10.5%
11.3%
12.9%
14.0%
14.4%
14.4%
13.3%
12.7%
8.1%
9.1%
10.4%
10.5%
11.6%
11.5%
12.0%
11.8%
general
93.1%
93.2%
91.4%
89.2%
86.1%
81.5%
87.1%
88.0%
without commercial paper
86.4%
88.5%
86.7%
85.5%
81.5%
79.3%
82.0%
84.0%
Efficiency Ratio (SICAM) (%)
52.5%
52.1%
52.5%
55.2%
58.4%
54.1%
55.5%
69.5%
Return on Equity (ROE) (%)
6.4%
14.1%
13.7%
11.8%
11.5%
13.0%
12.4%
4.2%
Return on Assets (ROA) (%)
0.4%
1.0%
1.0%
0.9%
1.0%
1.1%
1.1%
0.3%
73.6%
94.7%
98.4%
105.4%
113.6%
108.9%
136.0%
127.4%
Number of CCAMs
126
120
118
111
105
100
92
88
Number of branches (Total SICAM)
584
598
616
628
632
647
670
682 b)
Average net assets per Caixa
61.5
67.0
71.8
82.0
91.6
102.5
116.9
137.5
4.6
5.0
5.2
5.6
6.0
6.4
7.2
7.8
Tier 1
Transformation Ratio (%):
More than 90-day Overdue Credit Ratio (%)
Average number of branches per Caixa
a) Ratios for 2002 to 2006 calculated in accordance with Portuguese rules (PCSB), transitional rules in 2007 (NCA) and IAS in 2008 and 2009.
b) Includes 9 branches of the Caixa Central and 2 offices for business with companies.
c) The accounting framework before 2008 was the PCSB, so figures are not directly comparable.
Annual Report 2009 - Consolidated