Portugal - A victory for the bureaucrats

When a private bank due to be sold to a foreign group ends up in state hands it's hardly a sign that all's well with the European single market. This was the outcome of the stand-off between the European Commission and the Portuguese government over the Champalimaud banking group. Spain's BSCH attempted to take a stake in the group, sparked off a huge row about cross-border M&A and ended up with only some of the pickings. Other key assets have ended up under state control, even if only temporarily. From every angle the Champalimaud affair is an example of the wrong way to make takeovers. For octogenarian banker António Champalimaud it was a final chapter in a lifetime of battles with bureaucrats. Brian Caplen reports

When Portugal's legendary tycoon António Champalimaud decided to sell his banking interests he gave his son Luís a leading role in the negotiations. As António is 81 and has failing eyesight this delegation of power to younger blood made sense. The problem was that Luís didn't much want to sell. Luis Champalimaud In a way this was not surprising. As president of Banco Pinto & Sotto Mayor (BPSM), the group's major asset, Luís, like the rest of the family, stood to gain materially from the sale but he alone was likely to lose his job and position at the centre of Portuguese banking. Potential buyers say that when they negotiated with António things went well, but when they got into more detailed discussions with Luís the project stalled. Given António's business acumen it could be that this was part of a clever negotiating strategy. However, it had the effect of dragging the talks out for years and nearly scuppered the initiative of Spain's Banco Santander Central Hispano (BSCH), the eventual buyer of Champalimaud's other banking assets, though not BPSM.