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July / September 2020 €3.00

RESIDENTIALSpace to work

BANKSRestoring trust

PROPERTYA recovery manifesto

Nº12 July / September 2020

SHIPPINGBest in class

COMMERCEMoney in mud

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The Covid-19 pandemic has created an economic and financial crisis of unparalleled proportions,not only for Portugal but the entire world. In Portugal it will lead to an estimated fall in GDP ofanywhere between 5.7% to 8% for 2020, unemployment of 9.7% and an increase in public debtnot seen since the 1950s.On the positive side Portugal has been praised by the international media and health agencies forits timely response to the novel corona virus by putting the country under lockdown from 14 Marchwhich, together with an uncommonly high level of common sense displayed by a stoic population,resulted in some of the lowest contagion and death rates in Europe and proved just how adaptable,flexible and united the Portuguese are as a people.Large swathes of the business community too showed just how capable it was to embrace changewith, in many cases, business continuing under a new normal from people’s homes via IT platformssuch as Zoom and Skype.In this Issue 12 of Essential Business we have also kept a united front, communicating and workingwith our team and stakeholders at a distance using remote technology which surely will now become a constant feature of our working lives going forward. The result is an edition that puts the spotlight on Portugal’s banking sector which has been in theheadlines for years for all the wrong reasons, but which has largely stepped up to the plate in timesof crisis to help businesses and families through the crisis, while having to receive a torrent of criticism from the media and public for sins past, present and imagined that it is making a valiantattempt to redress.We also focus on two other essential pillars of the Portuguese economy, Tourism and Real Estatewhich, without sensible Government measures in terms if fiscal incentives, will find it difficult torecover quickly from the crisis.And while we like to analyse the present and look to the future, sometimes a reminder of Portugal’sglorious trading past is important to understand how despite past economic crises and wars, commerce between it and her oldest ally England found a way to flourish in the midst of a chaoticEurope blighted by continental and civil wars, and yet trade adapted, continued and recovered aswe will surely recover now from the present economic challenges.

Chris Graeme, Editor

FERNANDO FARIA DE OLIVEIRA

Estatuto editorialA revista Essential Business pretende dar a conhecer à comunidade empresarial e internacional em Portugal e a quem visita o país em trabalho, para eventos profissionais oupara investimento, a realidade e atualidade sobre negócios em Portugal.Os conteúdos são focados em Lisboa, mas sem deixar de parte acontecimentos importantes noutras zonas do país. Enquanto temas relacionados com a imobiliária e o turismosão uma presença constante, a revista e os seus suportes digitais cobrem todas as áreas de negócio, incluindo a saúde, o retalho e as mais diversas indústrias.A revista Essential Business assume o compromisso de assegurar o respeito pelos princípios deontológicos e pela ética profissional dos jornalistas, assim como pela boa-fédos leitores.

Publicação registada na Entidade Reguladora para a Comunicação Social com onúmero 127106. Director Fernando Caetano Propriedade Open Media S.A. NIF 507100492 Administrador/Presidente do Conselho de Administração Bruce Patrick Hawker, Presidente da Mesa da Assembleia Fernando Matias Caetano

1 - É garantida a liberdade de imprensa, nos termos da Constituição e da lei. 2 - A liberdade de imprensa abrange o direito de informar, de se informar e de serinformado, sem impedimentos nem discriminações. 3 - O exercício destes direitos não pode ser impedido ou limitado por qualquer tipoou forma de censura.

02/06/2020 17:23

Essential Features

12 One PortugalNAVIGATING ROUGH SEAS

16 Portugal’s banksREBUILDING TRUST

22 Cover storyFERNANDO FARIA DE OLIVEIRA, PRESIDENT OF

THE PORTUGUESE BANKING ASSOCIATION (APB)

28 Opinion DAVID SAMPSON

30 Office, space, gardenWHAT ALGARVE HOUSE HUNTERS WANT NOW

34 Portugal tourismSALVAGING THE SUMMER SEASON

40TeleworkingLEADERSHIP IN TIMES OF COVID-19

42 Covid and the factory floorPROTECTING THE WORKFORCE

44 Ireland-Portugal tradePOST-PANDEMIC OPPORTUNITIES

46Ted talk: Chitra SternWHY PORTUGAL TRENDING

50 Covid-19RESHAPING THE DIGITAL MARKETING LANDSCAPE

52YdataEFFECTIVE PRIVACY ENHANCING TECHNOLOGY

54 Building bridges, joining cultures

INTERNATIONAL CLUB OF PORTUGAL

58 It’s all about the moneyDIGGING UP PORTUGAL’S PAST IN ENGLAND

60 Beyond oilANGOLAS’S DIVERSIFICATION DRIVE

62 SuperimposeSHAKING UP THE ADVERTISING INDUSTRY

66 BPFACING UP TO A OIL-FREE FUTURE


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Essential EventEssential Event


The UK and US - two opportunities in the coming years

With the US elections on the horizon, Alan Draper, Professorof Political Science at St. Lawrence University, AmbassadorFrancisco Seixas da Costa, former Permanent Representativeof Portugal on the United Nations and political analyst NunoRogeiro author of the book ‘The Donald Pact - Trump: Newcontract with America or fraud?’ take stock of the likely outcome on November 3, 2020 at a joint lunch event withthe American Chamber of Commerce in Portugal (AmCham)and the American Club of Lisbon (ACL).

Trump and the US elections— a disruptive but nottransformative president

Portugal’s Minister of Foreign Affairs, Augusto SantosSilva, said that redefining economic relations with theUnited Kingdom post-Brexit and closer economic tieswith the United States were among five opportunitiesfor Portugal in the coming years.Addressing more than 200 people at an event organisedby the International Club of Portugal in March at theSheraton Hotel in Lisbon, the minister said that he wasoptimistic regarding US relations and an eventual tradedeal with the European Union.

Augusto Santos Silva (Minister of Foreign Affairs) and Manuel Ramalho (President of the International Club of Portugal) Prof.Alan Draper / Nuno Rogeiro / Embaixador Cruzeiro Seixas / Monica Silvares

Ambassador of Panama Pablo Garrido Araúz and Miguel Frasquilho (Board Chair TAP)

Minister Augusto Santos Silva

Emily Kuo Vong, Manuel Ramalho and Ambassador of the Philippines Celia Anna Mallari Feria Thierry Henrot Embaixadora Nienke Tooster / Antonio Martins da Costa /Cruzeiro Seixas

Carlos Loureiro / Lara Campos Tropa / Pedro Penalva Charles Buchanan / James Kelly / Carlos Loureiro

Pedro Pessoa e Costa, Ambassador of Panama Pablo Garrido Araúz and Anne Taylor Marina Prévost-Mürier, Paulo Betti and Conceição Caldeira

Paula Caetano and Eduardo Teixeira Minister Augusto Santos Silva, Manuel Ramalho and Emily Kuo Vong Frédéric Fines-Schlumberger Fernando Reino da Costa / Miguel Almeida / Jose Gonçalves Filipa Monteiro / Octavio Lopes / Alexandra Athayde Antonio Martins da Costa / Fernando Neves de Almeida / Kelly Hapka

João Gonçalo Maciel, Vítor Tomás, Carlos Madeira, José Velez, Paulo Moniz, Luís Matias and Pedro Penalva Otilia Reis / Prof Alan Draper Rita Faden /Cruzeiro Seixas


Essential Shipping

Covid-19 has had an impact onglobal shipping. Bearing in mind

that the first cases of Covid-19 emergedin December 2019, the report ‘Covid-19impacts on Global Container ShippingTrade’ by Maritime intelligence companyeeSea showed that the pandemic had seriously impacted global shipping con-tainer capacity.

To date, a total of 1,675 sailings havebeen cancelled, or 11%; which comes outat 13% for shipping groups 2M, 17% forthe Far East’s Ocean Alliance and 17%for THE Alliance, while only 8% of non-alliance sailings have been cancelled.


Essential Business spoke to Shuni -chiro Mizukami, the Managing Directorof ONE Europe and Africa who says thatdespite the crisis ONE has effectivelymanaged its container fleet to ensure thatcustomer needs continue to be met.

“There are continuing challenges toall shipping operators and logistic part-ners, as a result of COVID -19. A down-turn in global trade means a reduction inbooking demand, together with quaran-tines, lock downs and ensuring all ourcolleagues and business partners are ableto operate safely with minimal risk whilstproviding a reliable service to our cus-tomers is certainly a challenge. But,ONE and its business partners are ded-icated to keeping the logistics chainmoving, delivering your everyday, intimes of crisis,” explains ShunichiroMizukami.

“While we cannot foresee the future,ONE is following the situation closelyand preparing for the market to pick upso that we are well positioned for the future and can continue to meet our customers’ needs,” he adds.

The company says that the end of2019 and the beginning of this year sawa smooth transition to low sulphur fuelto meet IM02020 regulations.

“We also succeeded in quickly adjusting our network to meet customerrequirements. When COVID-19 brokeout, we immediately activated our Busi-ness Continuity Plan all around theworld. When the company was created,a key objective was to enable remote access to our systems anywhere in theworld. Therefore, as countries imposedquarantines, we were able to continueworking seamlessly. I hope that our cus-tomers benefitted from our flexibilityand efficiency” he says.

Shunichiro Mizukami believes theshipping industry is very resilient andused to adapting to the market, whetheradapting to meet new international regulations such as IMO 2020, or dis-ruption to China and US trade activity,ONE has been able to flex its services inthe market.

“The formation of ONE two yearsago from its merger of K-Line, NYK and

ONE PortugalTop of the class!

This year has seen rough seas so far for Europe’s container shipping sector with 11% or atotal of 302 shippings cancelled in May on all the main line trades, according to maritime intelligence company eeSea. But how has ONE Ocean Network Express, which has a

vigorous presence in Portugal, been steering a choppy market? TExT CHRIS GRAEME

PHoToS ONE SHIPPING


Essential Shipping

MOL liner business has meant we havesuccessfully increased network and ser -vice coverage and this has put us in astrong position to compete in a moreconsolidated industry”.

ONE Shipping Portugal used to becalled K-Line Portugal and further backin time Garland. “Garland is a long-trusted partner in Portugal for one of ourlegacy companies. The trust and friend-ship have been smoothly integrated intoONE Portugal, the new joint venture between ONE and Garland,” notes Shunichiro Mizukami.

BEST IN CLASS

Despite Covid-19 ONE Shipping Por-tugal has retained its strategy in Europeto be one of the ‘Best in Class’ carriers.

“ONE is not aiming to the join megacarriers of the industry, but we wouldlike to be one of the ‘Best in Class’ in Europe and Portugal, sailing along withour customers as their trusted partner.As a part of our roadmap, ONE has been

Essential Shipping


and will continue to enhance digitali -sation to improve service quality andcustomer user experience”.

ONE Shipping in Portugal operatesservices from the ports of Leixões (Porto)and Lisbon to Rotterdam.

Through its partner Garland whichoffers Sea Freight forwarding services toand from Iberia to world-wide destina-tions, last year saw 257,700 TEUSshipped equating to 9,656,000 SeaFreight tons.

Whilst ONE Shipping does not pro-vide a breakdown for the financial resultson its Portuguese-Europe stretch, ONEenjoyed a profitable year by the end of2019 after posting three consecutivequarters with a positive result. It was thefirst annual profit since the carrier beganoperations in 2017.

ONE’s FY third-quarter earning fromOctober to December show the carrierjust managed to remain in profit byUS$5 million and profits grew US$121million in the second quarter.

MERGERS

In April 2018 the Japanese shippingcompanies Kawasaki Kisen Kaisha (“K”Line), Mitsui O.S.K. Lines (MOL) andNippon Yusen Kabushiki Kaisha (NYK)merged to create Ocean Network Express (ONE). This made ONE thesixth largest container shipping companyin the world with over 250 ships and acapacity of 1,563,000 TEUS, with amarket share of 7.1%.

As a result of this ambition, ONEEurope set up commercial companies instrategic places around the world includ-ing Portugal and it was within this con-text that ONE Shipping Portugal wasfounded.

The Garland Group, which had already been a partner of “K” Line Portugal, was selected to participate inthe ONE joint venture in Portugal,“being obviously extremely proud to feelthat our success over various years with“K” Line had been recognised inter -nationally and would be continued,” as

Mark Dawson the director of the Ship-ping area at Garland said at the time.

Since 2018 ONE increased the shipsworking for IBESCO (Iberia, Europe &Scandinavia loop) to over 1000 TEUs ofcapacity, corresponding to 40% growthwith a major focus on the Portuguesemarket.

PORT MODERNISATION

AND INSTABILITY

Portugal as a market has not beenwithout its problems in recent years,largely due to port worker union run-inswith the Portuguese Government overpay, contracts and working conditionswhich resulted in stevedores downingtools and going on strike.

The most recent case in March involved the union SEAL (Union ofStevedores and Logistics Activity) whichprolonged its strike at the Port of Lisbonto mid-April against “collective layoffs”but was only the latest in a long string ofdisruptions stretching back to 2016 andbefore largely over union insistence onmaintaining collective contracts whichport operators at both Lisbon and Portosay are economically unviable, allegingthat they are “totally maladjusted tothe reality of losses in cargo and clientssince 2016.”

“Industrial disputes have an impacton the competitiveness of ports. Theport of Leixões has benefited fromlabour stability and consequently is see-ing its movement grow steadily over thepast few years. The industrial actions inLisbon have created a less favourableimage of the port. It would be desirablefor these disputes to be resolved, thus allowing shipping lines and the market

to regain confidence in this port,” saysShunichiro Mizukami.

On the positive side, the PortugueseGovernment has made considerablestrides in modernising and expandingPortugal’s ports as part of a long-term investment plan which began in 1997with investment and modernisations pro-grammes at all five ports in order tomake them more able to compete withina international context after years ofdecay and decline through the 1980sand most of the 1990s.

This also includes ambitious plans toinvest heavily in the Port of Sines nearSetúbal south of Lisbon, making it oneof the largest and most modern ports in

Europe, with transatlantic connectionsbetween Europe and the United Statesand a proposed high-speed freight raillink to Madrid and France.

This involved changing the businessmodel from the existing Tool Port toLandlord Port with a simplification ofprocesses, namely by cutting red tape viathe introduction of the Single Port Invoice and the Unique Port Windowand Unique Logistics Window.

“Twenty years on the Governmentdoesn’t see any reason not to now look atthe ports and the way the port authori-ties work in another way, making themmore agile, capable of cooperating withother agents, making them more com-petitive and profitable in service to thenational economy” says José AntónioContradanças, an economist and advisorto the company Sines Port Authority Administration (Administração do Portode Sines, S.A.).

“Port infrastructures must effectivelymodernise and adapt to market changes.The two ports where we operate, namelyLeixões and Lisbon, have projects to expand and modernise their structures,which has already partially taken place.When the works are finished there willbe many more facilities available to portstakeholders and all will benefit from theimprovements” concludes ShunichiroMizukami, the Managing Director ofONE Europe and Africa. �

“GARLAND IS A LONG-TRUSTED PARTNER IN PORTUGALFOR ONE OF OUR LEGACY COMPANIES. THE TRUST ANDFRIENDSHIP HAVE BEEN SMOOTHLY INTEGRATED INTOONE PORTUGAL, THE NEW JOINT VENTURE BETWEEN ONE AND GARLAND”.


Essential Banks

In April 2020 the unthinkable hap-pened. During the peak of the Coro-

navirus pandemic, Portugal’s normallymild, affable and non-confrontationalPresident Marcelo Rebelo de Sousa didsomething astonishing.

He summoned the presidents of Portugal’s main banks to the presidentialpalace and in no uncertain terms told thebankers that they had a responsibility towards economic recovery and toldthem it was now time to repay the taxpayers for the help they had given thesector over the past decade.


Everyone in Portugal knew the presi -dent was referring to the many hundredsof millions of euros of public money thathad been used to bail out Portugal’s bank-ing system after a catalogue of recklesslending, casino-like banking and misma -nagement which, when the financial crisis took hold from 2008 onwards, revealed just how close parts of the bank-ing system in Portugal were to collapse.

Today, in the wake of the Coro -navirus pandemic, it seems increasinglylikely that Portugal, in common withmost Euro Zone countries, will face atbest a recession similar to that of 2007-2014 and at worst, the Great Depressionof the 1930s.

The European Central Bank (ECB),the Bank of Portugal (BdP) and Portugal’sMinister of Finance, Mário Centeno,current president of the EU’s group of finance ministers Eurogroup, all agreethat Portugal’s banks are, despite somelingering systemic weaknesses, in a bettershape to deal with an external shock suchas the current one provoked by theCovid-19 pandemic.

MEETING TARGETS

Even so, Portugal’s central bank, inline with the European Central Bank(ECB) admits that some banks in Portugal may fail to reach their capita -lisation targets.

These are underpinned by theBasel III reforms built on the lessons

learned from the 2007-2014 crisis aboutthe costs for taxpayers of imprudent risk-taking, speculative liquidity managementand undercapitalised banks.

The Portuguese banking system wasparticularly hard-hit by that crisis, both forexternal and internal reasons, with a num-ber of banks failing not just because theylacked liquidity, but rather because theyhad made so many high-risk and ill-judgedinvestments. They had ended up with acrop of toxic debts on their books whichmade them look generally unsound.

In the wake of that crisis a numberof Portuguese banks either disappearedor ended up seriously undercapitalised.The result was that the Portuguese Statehad to step in and rescue them. From2008 to 2016 it spent an estimated€14Bn of public money on shoring upthe banks, with much of this moneywritten off.

The overall losses at the time, accor -ding to the Court of Auditors and National Statistics Institute, representednearly 8% of Portugal’s GDP and led tothe ratings agency Moody’s warning thatthe Portuguese banking system was oneof the most vulnerable in Europe.

The first bank to collapse in 2008was the Banco Português de Negócios(BPN) which had to be nationalised toprevent €1.8Bn of losses affecting thefinancial sector. The president of thebank, José Oliveira e Cost who had runthe institution since 1997 ended up

Portugal’s banking sectoras good as gold?

The reputation of Portugal’s bankers among the general public has, perhaps unfairly, hit a new low this year. Yet despite the scandals and sins of the past, Portugal’s banks are actually in better shape today than they have been for 20 years

TExT CHRIS GRAEME


Essential Banks

being arrested on suspected tax fraud,money laundering, forgery, abuse ofcredit and illegal gains.

The bank was sold to the AngolanBanco BIC for just €40 million in 2014leaving the tax payer out of pocket by anestimated €3.2Bn. That bank in turn,more recently headed by the former finance minister of the discredited Socialist government of José Sócrates,Fernando Teixeira dos Santos, was againplastered all over the national press forthe wrong reasons.

In 2019 it emerged that its mainshareholder, Isabel dos Santos, with42.5%, may have bought her sharehold-ing with dirty money allegedly stolenfrom the Angolan State.

On 19 January 2020 the Interna-tional Consortium of Investigative Jour-nalists (ICIJ) published a detailed reporton how dos Santos had amassed herwealth over the years. The report, calledLuanda Leaks, provides evidence of howshe made a fortune at the expense of theAngolan people and then used thatmoney to buy a considerable share inBanco BIC.

Essential Banks


When the scandal blew up, NunoRibeiro da Cunha, her private financialmanager and director of Private Bankingat EuroBic (the bank’s name had beenchanged from Banco BIC to EuroBic in2017) was found dead at his home inJanuary after taking his own life.

In 2009 the Banco Privado Português(BPP) failed and was wound up after thePortuguese Government refused to bailit out after it emerged that the bank wasassociated with crimes of falsification ofaccounts and money laundering.

In July 2009, former BPP boardmembers Paulo Guichard and SalvadorFezas Vital were suspended by the Bankof Portugal while Jõao Rendeiro wascharged with falsifying accounts, taxcrimes and money laundering.

Nevertheless, by the time the bankcollapsed, the Government had alreadystood guarantor to considerable moniesand the tax payer was once again saddledwith €650 million in debts.

THE FALL OF BES

In 2014 the country’s most respectedhigh-street bank Banco Espírito Santo

collapsed when it was discovered thatthe bank had whitewashed its balancesheets to cover up losses of around€3.5Bn.

The Governor of the Bank of Portu-gal, Carlos Costa, gave reassurances thatBES, run by Ricardo Salgado famouslynicknamed ‘Mr. I own the whole lot’ wasas safe as houses. His words were that itwas “sound, robust, solvent and quite awonderful business”.

From the ashes of BES emergedNovo Banco, created by the Bank of Portugal using BES’s good assets. ThePortuguese State and the other banksthrough a Resolution Fund initially In-jected €4.9Bn to recapitalise the bank.

The new bank, however, has contin-ued to lose money. First, under the lead-ership of Vítor Bento who resigned afterrealising that the bank, if sold, wouldlose the State billions of euros. Thencame Eduardo Stock da Cunha whoquickly went.

The Resolution Fund was the bank’sonly shareholder until 2015 when theGovernment received various bindingand tentative offers from the Spanish

banking group Banco Santander SA, theChinese insurance group Fosun Inter -national Limited, the privately ownedChinese insurer Anbang Insurance andthe American private equity firm ApolloGlobal Management. However attemptsto sell the bank were hampered by lowbids with the Government reachingthe conclusion that the offers were unsatisfactory.

In 2016 the Resolution Fund receiveda new crop of offers from China’s Min-sheng Financial Holding, Apollo, Center-bridge and Lone Star. Early the followingyear Aethel partners made a bid.

But it wasn’t until March 2017 thatthe Portuguese Central Bank announcedthat a US vulture fund Lone Star Fundswould acquire 75% of Novo Banco in return for a capital injection of €1Bnwith the other 25% held by the Resolu-tion Fund.

More recently, the bank under theleadership of António Ramalho, has con-tinued to improve its business, attractinghealthy deposit growth and offloadingtoxic assets and Non Performing Loansdespite still having one of the worst single evaluations from the EuropeanCentral Bank of any of Portugal’s banks.

Yet in 2020, as the Covid-19 crisis hithome, Ramalho and his senior manage-ment became almost public hate figuresfor all the perceived ills and pent upgrudges the Portuguese public had builtup over the past decade when they failedto convince some MPs, the press andpublic that a further loan unwritten bythe Government and already accountedfor worth €800,000 was money wellspent. Nevertheless, for the second yearon the trot, the ECB has relaxed its capi -tal ratio regulations for Novo Bancowhich registered a loss of just over €1Bnthanks to its toxic legacy from BES.

SHIPSHAPE WITH A FEW LEAKS

Even so, despite the crop of scandalsand plain mismanagement over the pastdecade, Portugal’s banking system hasmade a remarkable recovery since theglobal financial and sovereign debt crisis.

In the post crisis period the regulatoryand supervisory framework was consider-ably reformed and banks in Portugal, likeelsewhere in Europe, underwent signifi-cant changes and restructuring. The re-sult is that, with few exceptions, banksbalances are of a better quality and theyhave deleveraged which has led to higherlevels of liquidity.

In Portugal’s case, this meant reduc-ing Non-Performing Loans (NPL) andclearing both commercial and residentialproperty portfolios accumulated becauseof defaults off their books through auc-tions, roadshows or selling them on toreal estate asset management companies.

"DESPITE THIS TECHNO-LOGICAL BANKING REVOLUTION IN PORTUGALAND A RETURN TO MORETRADITIONAL BANKING VALUES WHEN IT COMES TO LENDING, THE SECTORHAS YET TO RECOVER THETRUST OF THE GENERALPUBLIC IN ITS FINANCIALINSTITUTIONS”.

Essential Banks


The core capital at Portugal’s banksis more robust which means a greater capacity to withstand shocks, at leastthey were before the Covid-19 crisis andshutdown of international commerceand trade.

Another big improvement in the sys-tem was structural in terms of a shakeupat a shareholder level.

In the past, both before and afterthe 1974 Revolution, private banks inPortugal were largely held by companiesowned by entrepreneurs and powerfulfamilies. There are no longer today anybanks in private individual or familyhands. Some, like Banco Espírito Santono longer exist, at least as they were,while others are owned by shareholderswhile the capital in the larger banksis controlled by international financialorganisations.

And in terms of how they are run,Portugal’s banks are more efficient andprofitable, and even Novo Banco, which,as referred, is over €1Bn in the red,would actually be nearly €180 million inprofit if it weren’t for the toxic assets andbad loans it had inherited from BES.

That said, the profitability of Portugal’sbanks is still below capital costs.

Risk management practices havebeen reined in, greater due diligence isbeing exercised and with the currentGovernor of the Bank of Portugal, CarlosCosta’s term in office coming to an end,likely to be replaced by Portugal’s currentthrifty and prudent finance ministerMário Centeno, so too should bankingsupervision.

Other areas too, such as Anti-MoneyLaundering (AML) — this didn’t work sowell with EuroBic - compliance, auditing,digital security, data treatment and pro-tection have all developed significantly.

Technological innovation, in particu-lar digital, has revolutionised many day-to-day bank operations to the benefit ofcustomers and operational efficiency.And after the Covid-19 crisis, whenwhole swathes of the older Portuguesepopulation, hitherto still preferring topop into their banks to conduct theirbusiness transactions face-to-face, thisrevolution in laptop and mobile bankingis likely to accelerate and become wide-spread even among them.

In fact, during the Covid-19 crisisPortugal’s banks such as Millennium bcpand Novo Banco have even run onlinecampaigns showing teenagers helpingtheir elderly grandparents get to gripswith home banking applications.

THE BIG CHALLENGES

Portugals banks, in line with mostothers in Europe, face a mountain ofchallenges not made easier by the cur-rent Covid-19 pandemic.

For starters, financial margins arebeing eroded making the traditionalbanking model increasingly unsustain-able because of current monetary policy.

The emergence of dynamic and tech-nologically driven no-frills branchlessbanks with little or no overheads such asRevolut, Lydia, Monese, N26, WiZink,Open Bank and Banco Best have all putpressure on traditional banks hamperedby the costs of supporting nationwidebranches and a higher workforce.

REGAINING TRUST

Despite this technological bankingrevolution in Portugal and a return tomore traditional banking values when itcomes to lending, the sector has yet torecover the trust of the general public inits financial institutions.

For many ordinary citizens in thestreets, banking in Portugal is still syno -nymous with the cronyism, corruptionand incompetence which has tarnishedthe image of the sector as a whole, in-cluding, unfairly, those banks whichwere not involved in the series of scan-dals which had taken place nearly adecade earlier.

And yet the televised parliamentaryenquiry into what went wrong with Por-tugal’s banks, with a stream of seniorbanking and supervisory figures sayingthey knew nothing, including the cynicalsneering of a maverick art collecting entrepreneur during hearings, only rein-forced that image and public distrust.

At the end of the day, despite bothinternal decadence and external shocks,Portugal’s banking sector is more robust,transparent and better managed that ithas been for over 10 years. It is just ashame that it took a major world economic crisis and a loss of reputationand public confidence for it to makethat change. �


Essential Interview

The Portuguese banking sectorhas undergone a huge revolu-

tion over the past decade, withmany Portuguese banks and familyowned banking interests vanishing.Does it worry you that there is nolonger a strong Portuguese presencein what have become largely multi-national banks?

The Portuguese banking sector hasindeed gone through a very significantrestructuring over the past few years.Today it is in a much stronger positionand better capitalised than in the pre -vious crisis and has more liquidity. Justto get an idea, today, Portugal’s bankshave a capital ratio of 14.1% whereasback in 2011 it stood at 7.8%

It is important for any country tohave banks whose centres of decision-making is at a national level. But, moreimportant than where the capital comesfrom is having shareholders with the financial capital to invest and bolster thecapitalisation of our banks whenevernecessary, so they can fully fulfil theirfunctions, namely financing the econo -my and its citizens.

Would you say that the sector inPortugal is more robust and agile interms of liquidity and being able towithstand external shocks such asthe current Covid-19 crisis?

The sector today is much better pre-pared to deal with adverse shocks than itwas at the start of the last financial crisis.

The banks are more solid and capi-talised, with greater liquidity. The ratioof credit/deposits has fallen from morethan 150% in 2011 to less than 90% nowwhile the ratios of Non-PerformingLoans have seen a sharp decline. Theratio of liquidity cover is more than220%, very sustained by client depositswhich represent two-thirds of bank finance.

That said, despite the achievementsand progress of the last few years, thebanks also face various challenges,namely improving their profitability,adapting their business models to newbehaviour, both in terms of clients andthe competition of new players, the mas-sive amount of regulations imposed onthe sector which require multiple datareports and which demand additional efforts to remain agile in carrying themout. The banking sector also needs tocontinue to mend its reputation. Tothese now is added the crisis causedby Covid-19.

We are facing a great economic re-cession, one without precedent in recenthistory, that introduces new variableswhile intensifying others that had alrea -dy began to be apparent. This crisis,apart from the tremendous impact thatit is having on the economy (placed in aninduced coma), particularly for somesectors, on employment and on the in-come of citizens, will inevitably affectthe banks, namely their profitability, in increasing provisions and in terms of

capital consumption, in Portugal like inother countries.

The real impact of this crisis, how-ever, will depend on multiple factorswhich are not yet clear, in particularthe public stimuli packages aimedat the economic return, namely the European financial aid, which will beimplemented.

We have seen the closure of manybranches and the visibility of physi-cal banks in the street is less todaythan a decade ago. Do you thinkphysical banks in Portugal willbe totally replaced by online andmobile banking in Portugal?

This trend is global and not exclu-sively seen in Europe or Portugal and isan inevitability created by the emergenceof the digital economy.

However, physical bank brancheswill not disappear. The new banking sector business model looks to serveboth digital and traditional clients. Manyclients will not give up going tobranches, that personal human contactand advice. And many digital clients toowill continue to use both forms of ser -vice. And although the use of cash (andeven credit and debit cards) for pay-ments: use of these will also decline butwon’t disappear.

But the shift to digital isn’t just res -tricted to the level of client relationshipchannels but what is certain is that thelockdown to which citizens were forced

Riding the stormThe President of the Portuguese Banking Association (APB), Fernando Faria de Oliveira has had to navigate the sector through some of the stormiest seas in Portugal’s recent

banking history. Yet despite one or two shipwrecks and a few leaking vessels, its members are finally sailing into calmer waters.

TExT CHRIS GRAEME


Essential Interview

to adhere speeded up the use of digitalpayments.

The banks have adjusted — and willcontinue to adjust — including their internal structures and have sought to attract new talent and retrain existingstaff, not just to meet the new require-ments and expectations of clients, butalso to increase productivity, efficiencyand quality of service. To keep up withthe digital revolution will require new“banking partners”. Just as virtual bankbranches will not completely replace actual branches, the introduction of automised models of banking willnot replace bank staff. Confidencewill always require a human aspect inbanking.

Low interest rates have become afeature for the banking sector formany years now. What innovativeways can the banking sector posi-

Essential Interview


tively react to this and if the interestrates continue low what is theincen tive for people to even usebanks for their savings?

The traditional banking method, essentially based in financial margins,faces huge challenges because of thecurrent content of very low or even negative interest rates.

The banks have tired to manage theirfinancial margins so as to minimise theseeffects while developing alternative waysof revenue generation, namely by offer-ing additional banking services to clients,including diversifying products offer andservices based on digital innovations.

As to deposits, I think that confi-dence is the greatest asset that the bankshave right now. Even with interest of-fered to clients being at historically lowlevels, in Portugal client deposits havebeen consistently growing onwards andupwards.

The Portuguese banking sector gota bad reputation in 2019 followinga heated and nasty parliamentaryinquiry into “reckless lending andmismanagement”. Was the mediaand Parliament justified in callingthe banks to account and how haveyou been able to improve the imageof the sector?

The APB cannot discuss specificcases involving its members.

What we said at the time, and whichwe mention again now, is that the Por-tuguese banking sector was hard hit bythe sovereign debt crisis which caused avery deep recession that hit Portugalharder than the majority of other Euro-pean Union countries, which inevitablyresulted in an increase in default andlosses. And since in our country the levelof State, company and private debt wasalready very high, as a result of the eco-nomic policies pursued and excessivestructural dependence on bank loans,the impact of the recession had inevi -table consequences. This was by far andin fact the main cause of the losses suf-fered by various banks in Portugal.

It is also important to mention thatthe regulatory and supervisory frame-work that the banks are subject too wasprofoundly remodelled and tightened upfollowing the financial crisis, includingregulations governing risk evaluation andthe solvency of its clients. Naturally thebanks are the first to have a vested inter-est in ensuring that clients have the rightconditions to be able to pay their loans.

Corporate governance, due diligencerules and accountability proceduresare also today much clearer and better audited.

Regarding political scrutiny on theway banks operate — inevitable andhealthy in any democratic society — this

will always matter — and this has beenthe main focus of the APB - taking account of the current context and bankmanagement and relations specifically.Effective risk management does notmean eliminating them.

As to improving the reputation of thebanks, the results of the recovery effortsundertaken after the sector had been affected by the sovereign debt crisis, isthe most convincing argument.

But it has to be recognised that thebanking sector is not held in high regard:on the one hand, people recognise thatit is vital for economic and social de -velopment, on the other it is a usefulscapegoat for downloading everyone’sfrustrations. And since the previousworld financial crisis arose from the financial system (We’d like to pointout that this was not the case inPortugal, that was hit especially hard bythe sovereign debt crisis) in which various banks collapsed, some of whichbecause of fraud, it is very difficult forthe banking sector to entirely recover itsgood reputation.

All sectors of the economy arechanging with the rise of startups,alternative means of funding suchas venture capital, crowd fundingand other investment funds all com-peting with the banks in lendingmoney to finance new companies,particularly in the technology field.How are the banks able to competewith that or is their strategy diffe -rent now?

First of all, it is important to mentionthat rather than a challenge or a threat,this transformation has been viewed asan opportunity. The banks look atchanges in consumer behaviour andtechnological innovation as an opportu-

nity to be taken advantage of. Havingsaid that, we think competition betweenbanks and non-banks can be healthy forthe market and should be encouraged.

It is important, however, that regula-tion and supervision is equal for all andin particular that investors all have thesame level of protection. The contri -bution towards an innovative and com-petitive ecosystem requires that thesame regulatory and supervisory frame-work applies to all players — financialinstitutions, large tech companies, andFintech startups — within a logic of“same activities same risks — same rulessame supervision”.

In the concrete case of the FIN-TECH startups, more than competitors,these have arisen as important partnersfor the banks.

Finance Minister Mário Centenorecently said that the ResolutionFund was the “worst of its kind inEurope” regarding Novo Banco. Inyour opinion and in hindsightshould the banks have had to payto support Novo Banco or shouldthe good assets have been simplytransferred to a state bank such asCaixa Geral?

As referred, the APB cannot discussspecific cases involving its members.

The resolution measure adopted atthe time was the one which the authori-ties believed to be the best for the banksand for financial stability.

What we have questioned is the billthat the banks have had to pay throughthe contributions to the Resolution Fundand which is very high.

And whilst it is an inescapable realitythat the banks have had to foot the billfor this measure, we continue to hearthat the burden has fallen on the tax

"WHAT WE HAVE QUESTIONED IS THE BILL THAT THE BANKS HAVE HAD TOPAY THROUGH THE CONTRIBUTIONS TO THE RESOLUTION FUND ANDWHICH IS VERY HIGH. AND WHILST IT IS AN INESCAPABLE REALITY

THAT THE BANKS HAVE HAD TO FOOT THE BILL FOR THIS MEASURE, WE CONTINUE TO HEAR THAT THE BURDEN HAS FALLEN ON THE TAXPAYER".


Essential Interview

it’s taking to get the money to companiescannot be laid at the door of the bankswhich have even significantly reducedthe normal time it takes to draw up thecontracts for these operations. To this wewould add that the internal proceduresand rules set out to study, decidewhether to make the loans, even withinthe context of the pandemic still haveto be met.

We live in an exceptional time. It isimportant not to forget that there hasbeen an abnormally high number of ap-plications to the credit lines made by theGovernment and the usual procedures inplace were not prepared for that reality.But adjustments have been made to theprocesses underway within the time-frames that are contractually foreseen. Itis also important to mention that theappro vals granted indicate an insuffi-ciency in terms of the amount of moneyavailable in these credit lines whichcould also be behind some of the discon-tent, namely on the part of companieswhich have yet to see their needs met.

And naturally we really must empha-sise that the banks must thoroughly eva -luate risk, not just because we are obligedto do so, and for the sake of banking sec-tor financial solvency and stability, butalso in terms of ensuring a prudent useof public funds. We should not forgetthat we are talking about loans which arebacked up by public guarantees.

The banks have put aside €200 mil-lion in offsets (provisions), do youthink it is enough? Can the banksreally put aside any more?

The level of offsets announced cor-respond to estimates at the end ofMarch.

It was difficult then — and still is —to predict the dimension of the impactsfrom this crisis in family and companydefaults as it is for the type of recoverythat will be registered.

Naturally, as in any economic crisis,this will affect the banking sector. Thedimension of this impact and its reflec-tion in terms of impairments will also berather dependent on the level of publicaid given to families and companies, itbeing fundamental that there should bea strong aid package at a European level.

Essential Interview


We are facing a global crisis that istransversal but also asymmetrical in itsafter effects which derives from an exte-rior cause which is beyond the responsi-bility of States and which fully justifiesa direct intervention from the EuropeanUnion, making proportional means avail-able to all and which do not make exist-ing asymmetries worse and do not causedistortions at a competition level, notjust in terms of the company matrix butalso the banking system.

From your surveys and researchwhat today does the public expectfrom a banking sector. What pro -ducts and services do they want? Dothey want to go back to traditionalface-to-face banking or are theyhappy for faceless on-line banking?

We will continue to have traditionalclients who prefer the personal contactand ever more digital clients who valuethe immediacy and ease offered by digi-tal channels.

In Portugal and despite the use ofdigital banking becoming more popularand widespread especially among theyounger generations, we have seen agrowth in digitalisation among bankclients (56% of users in 2019 comparedto 38% in 2010).

The current context caused by theCovid-19 pandemic has significantly increased the use of online banking anddigital payment services. In the monthof April alone purchases using contact-less technology grew in comparisonto the like-for-like period by 44% and123% in value while immediate transfersincreased 197% in quantity and 58%in value.

The future - How do you see thePortuguese banking sector in 10years from now? Will the banks inPortugal have finally cleared alltheir toxic assets and NPL fromtheir balance sheets? How will tech-nology change the sector for thegood and bad? Do you see the riseof new Portuguese banks with Por-tuguese capital?

The level of uncertainty that charac-terise the world currently only allows usto respond in terms of what is desirable,

without, however, failing to take into account the big trends underway and theincentives derived from the Europeanproject and, in this case in particular, theBanking Union.

Therefore, digital transformation andthe importance of the client will be thedominant foci.

But other factors will determine theconfiguration of the national bankingsystem: for example, the interest of investors (which will fundamentally depend on the profitability of the sectorand the expectations of the evolution indemand), the evolution of the BankingUnion, of financial integration and theformation of pan-European banks, thecompetition of new players, be they fromthe payments area or financial brokerage. What is important is having banks thatare solid, modern, efficient and trust-worthy, that can guarantee to provide financing to companies and citizenswith a view to the economic and socialdevelopment of the country.

A banking sector that is diversifiedand competitive, maintaining some cen-tres of decision-making in Portugal.

Banks that meet the needs ofclients, competitive in internationalterms, which are concerned with theirreputations and ethics, with better governance and a heightened sense ofresponsibility fiduciary, social and eco-logical responsibility.

Are you worried about the bankingsector's exposure to Angola giventhe fall in oil prices?

The banks presence in the Portu -guese speaking countries is natural andstrategically understandable. We have in-tense historical links which justify them.

Naturally, the banks will take into account the situation and current con-text since they have to ensure not onlythe sustainability of their participatedcompanies in these countries as well astheir impacts on the headquarters ofthese banks. Having said that the levelsof exposure are bearable. �

payers. Why? Because, as the ResolutionFund had already been set up and didn’thave funds, the State which created it,had to do so through a loan with the par-ticipation of the banks to the ResolutionFund with an adequate amount of com-pensation. This loan is being paid andwill continue to be paid over 30 yearsfrom the contributions that the banksmake to the Fund.

And, meanwhile, we also have tomake contributions to the EuropeanResolution Fund which penalises thebanks a lot in relation to its Europeanpeers.

There seems to be a general cam-paign of criticism levied by themedia in Portugal against the bankswhich the Government seems happyto allow. In other words the banksare being painted the bad guysin the story. Is this fair and hasthe Government done enough tosupport the banking sector throughthis crisis?

The national banking sector is abso -lutely committed to lending its supportto the Portuguese economy at this par-ticularly challenging moment and proofof this is the vast raft of measures thatthe banks have adopted. On the onehand, by reducing the monthly paymentsthat families have through bank services,be that through moratoria, the reductionon exemption of various bank charges;on the other hand by injecting more liquidity into the economy throughfinan cing, especially loans to companiesand activity sectors most affected by thecurrent situation.

For example, the moratoria created,both by the Portuguese State and by thenational banks are among the mostfavourable in the European Union interms of terms and due dates, scope andconditions applicable, covering compa-nies and private individuals, mortgagesand personal loans. And the public gua -ranteed credit lines are also particularlybeneficial for companies.

Therefore, the banks are actually apart of the solution to the current crisisand so it is completely unfair and popu -list to claim that they are not doing so.The main criticisms about the long time


Essential Opinion


David SampsonInhouse Contributor

An Irish writer in the Guardian commented recently thatwatching the Cummings ‘road show’ made him think ofhis mother. She was, he wrote, “for almost all of her life, adevout Catholic. She was a kind and compassionatewoman, and she did not judge other people. But she followed the rules. There was one rule in particular shefound awfully hard: the church’s ban on contraception.But she believed in the authority of the church. She madethe sacrifices, and did what she was told. I will never forgether rage and disgust when, in her late 70s and early 80s,she discovered that the same church she loved andobeyed had been covering up the sexual abuse of childrenfor decades.”

The ongoing story of Dominic Cummings, the personal adviserto the Prime Minister Boris Johnson, is that he broke the lockdownrules which he had helped to get the UK government put into force.When it emerged that he and his wife and child had driven, probablyinfected with the virus, to quarantine in the North of England, therewere howls of rage and disgust at his behaviour. He expressed no regret and made no apology.

My first thoughts on hearing the story were not about mymother. In fact, I have had a sneaking admiration for Cummings’ iconoclasm and his willingness to challenge the status quo in manyareas and I did not relish the idea of seeing him taken down by thetabloids, whatever his sins, but the Guardian article did make me stopand think about public trust and ways it can be so easily lost.

How can it be personal when the personalities are gone?

The comparable people in Portugal who have lost the trust ofthe general public are bankers. Many people in Portugal do not payincome tax but almost everyone has, or had a relative who had abank account with one of the three leading banks: Caixa Geral, BCPand Banco Espirito Santo. It was therefore particularly shocking thatover the last decade many of the country’s leading bankers havebeen shown to be not worthy of being trusted with our money.

The State owned Caixa bank looks after the savings of many families, and its directors were shown not to have cared what securitythey were getting for the loans they made and not to have heededrisk warnings from their own staff. The directors of BCP were willingto pretend that the Bank’s increase in capital had been taken up whenin fact they were making fictitious unsecured loans for friends to subscribe for the bank’s shares. The former secretary of state whoheaded the BPN bank created a phantom subsidiary in Cabo Verdeand indulged in disastrous speculative real estate deals. Worst of allthe directors of the Banco Espirito Santo not only used offshore banksto make undercover payments to government and other officials, butled the bank into bankruptcy after admitting huge losses in its Angolan subsidiary, and leaving customers with unsecured loans toproperty companies in the group having misled such customers intothinking that their money was safely on deposit with the bank.

So the result is that nobody trusts the bankers to look after theirmoney and nobody wants to pay them to do so. But we need themnow more than ever. We need them to help clear up the mess theircolleagues left behind, and to help us get back on track. There is nouse in blaming those who are helping to clear up the mess for thesins of their predecessors.

LONE STAR AND NOVO BANCO Nowhere is this issue more evident than in the Novo Banco

which is the name for the new bank carved out of the corpseof the Banco Espirito Santo. Since the government stepped inand effectively took over the bank in 2014, the main politicalparties agreed that the best way forward was for the bank to becleaned up and then sold to the highest bidder. So, after one failedattempt, the government agreed in 2017 to sell 75% of the sharesin Novo Banco to the American vulture fund Lone Star for nil consideration on the basis that Lone Star injected €1Bn into thebank, in addition to the €4,9Bn already injected by the Governmentand local banks.

From the beginning of the sale to Lone Star the Governmentcommitted itself to injecting up to a further €3,8Bn into the bank incase the assets of Novo Banco turned out to be less than hoped for,and there had to be more write-offs of bad loans. In the budget for2020 the government made provision for it to make a large furtherinjection into Novo Banco and this budget was approved by parlia-ment. But shortly after the payment was made it became clear thatthe Finance Minister had not told the Prime Minister that the pay-ment was being made and a few days later it was revealed that thedirectors of Novo Banco were going to get bonuses for 2019, andthat the new financial director from Ireland got a huge signing-onfee at the start of his employment. The local media reacted with horror to the news that the government is pumping thousands ofmillions of euros into a foreign owned bank whose owners have always been clear that they want to make a profit and sell their sharesas soon as they can.

In Portugal, as elsewhere, it is to everyone’s benefit that the banksare well run. The EU already has in place rules under which limits areimposed on the salaries paid to the directors of banks receiving state

aid, but the public still feels that all bankers whatever their origins orpersonal histories are out to rip them off. The delays in bringingcharges against the guilty bankers and their ability to play the systemthrough multiple appeals only increase people’s frustration.

WE NEED SOLUTIONS BEYOND THE PERSONAL The Guardian commentator wrote that “if Cummings were half

as smart as he is supposed to be, he would have shown in his pressconference some glimmer of understanding that this kind of betrayalis of a completely different order to the one he and Johnson engagein so routinely. The ordinary treachery of saying one thing and doinganother — there will be £350m extra every week for the NHS; therewill never be a border in the Irish Sea – is mother’s milk to them. Perhaps because it is so habitual or because they are so used to getting away with it, their sense of how it works has become dulled.They missed the crucial fact that this time it’s different. This timeit’s personal.”

But in Portugal the problem is now the reverse. Portugal has always been a country where personal connections are especiallyimportant, but there is little of the personal left. Previously thebankers were Portuguese and were well known in the country, andthey publicly supported keeping businesses and banks under Portuguese control. That battle has been lost and many Portuguesebanks and businesses are now controlled by foreign banks and companies. Everything is decided remotely, there is little opportunityfor personal interaction.

No one is there to take responsibility for the abuses of the past,nor to apologise for them. The hope for the future is that a newmodel will emerge across the EU which is environmentally and socially friendly, and able to support initiatives which improve thelives of its citizens.

“IT IS SHOCKING THAT OVER THE LAST DECADE MANY OF THE COUNTRY’S LEADING BANKERS HAVE BEENSHOWN TO BE NOT WORTHY OF BEING TRUSTED WITH OUR MONEY”.


Essential Property

How the current Covid-19 pan-demic is affecting the Portu -

guese economy, the tourism sector andbusinesses has been thoroughly debatedin recent weeks. What has been less discussed is its impact on the Algarve’sresidential, resorts and second homemarkets, begging the question of whatfactors will motivate buyers in this sectorpost pandemic?

Miguel Palmeiro, Sales Director ofVilamoura World is reassuring when hestates what has become a reliable mantraof truisms for many in Portugal for years:that the Algarve region has the best tooffer when it comes to relocation —good weather, excellent infrastructure(including a refurbished airport), state-of-the-art health facilities, fine food andwine and wonderful beaches all of which

Essential Property

mean it scores top of the list when itcomes to that well-worn cliché ‘location,location, location’.

The Algarve also has the secondhighest GDP in Portugal and the secondhighest property values per square metreafter Lisbon.

The holiday region, he says, is a consolidated destination in terms of realestate, where you can find a wide rangeof investment opportunities from apart-ments and homes in resorts to gua -ranteed income generating investmentproperties.

“Buyers will discover that being inthe south of Portugal, away form concen-trated conurbations, will no longer be acompetitive disadvantage in a post-Covidworld, but rather an advantage as socialdistancing becomes a premium since the

Algarve has one of the lowest densitiesper inhabitants in Portugal. It also hasthe country’s largest foreign communitywill brings a dynamic of its own in termsof the real estate sector with a balanced,quality stock and no over-supply,” saysMiguel Palmeiro.

MOVE NOW

But if the Algarve has it all, UK buyers should not be blind to the poten-tial threats arising from Brexit andshould use the current lockdown periodand the Brexit transition period to December wisely.

Gavin Scott, CEO of financial advi-sors Blevins Franks, flags up a numberof threats which need to be planned forin the transition period. Top of the list isthe impact on sterling pensions.

Covid-19 - revolutionisingthe Algarve’s residential

housing marketThe Algarve residential market will gradually recover from the Covid-19 crisis with the region expected to remain as popular as ever. However, technology and client-centric products and services will be the rule rather than the exception in the post-Covid world, according to sector pundits who took part in a webinar ‘The Algarve Property

Market - Overcoming C-19’ organised by the Algarve Resident in association with the British-Portuguese Chamber of Commerce.

TExT CHRIS GRAEME


Essential Property

Pensioners used to get €1.50 per £1but are now very close to Euro parity,with relative net worth falling 35%.There could also be a 25% overseastransfer charge on pensions once thetransition period ends, so he stresses thatpeople have a short window of opportu-nity now to move.

Scott says there are also other tax incentives like the Portuguese Govern-ment’s Non-Habitual Resident (NHR)scheme which is “unlikely to change”.He advises potential movers to use thefurlough time to “make those plans nowrather than later” and adds that so far theresponse from potential buyers has beenencouraging.

On 1 April there was a change in Portugal’s pensions tax whereby pensionsfrom overseas which had been subject tozero tax will now face a 10% tax from theUK. However, tax-free dividends fromoverseas, with no capital gains tax to pay,remain unchanged in Portugal on pro -perty sales in the UK. “Brexit will not affect any of these benefits since agree-ments were already in place before,”he says.

“Movers need to match their Euro liabilities, take adequate tax planning

Essential Property


steps, think about when to capitalise onISAs, offset UK allowances against taxso that these remain the same regardlessof Covid-19 and Brexit, and focus onpensions and maximising the opportu -nities to come,” Scott advises.

Tiago Chaves, Senior Property Con-sultant at Fine & Country Algarve saidthey had used the lockdown to maxi -mised digital technology with online mar-keting, creating new ways of increasingexposure of their properties throughvideo listings, slide shows and videos, vir-tual tours and improving property listings.

“An increase in home working willlikely have an impact on the residentialmarket with higher demand for com-bined home-offices with good wifi a priority,” he says.

“We were very busy up until theCovid crisis, but enquiries tailed off giving us more time to concentrate onexisting clients. In the past few weeks,however, enquiries have been increasingagain,” he adds.

PRICES REMAIN STABLE

Regarding prices and whether theCovid-19 crisis and ensuing recessionwas likely to drive prices down, Miguel

Palmeiro says that since the last crisisprices have risen by 20% on average andare back at 2007 prices.

“I think we have to establish a diffe -rentiation on pricing depending on second hand or new build properties.Regarding second hand it depends onthe need for individuals to sell. The demand is there and yet there is not anover supply,” he says adding that thetimeframe to sale may be longer. Thesewill come into the market fast and sell atlower prices.

However he says in the case of newbuild where there is a totally differentmarket structure regarding developers.

“Today we don’t have an over fi-nanced market and at the same time wedon’t have an over-supply of stock. In ourcase in Vilamoura which is still underconstruction we have over 50% sold, Idon’t have any reason to lower prices. Wehave to look at the market over time andcalmly see how it will react,” he adds.

In Portugal he says there was a 1.2%increase in January and 1.4% in Februarywhile in March there was an increase of0.4% meaning that for now there are noconditions to warrant cutting prices fornew build.

Tiago Chaves backed up the forecastby stating there is still demand backedup by supply and the crisis was notcaused by lack of demand or over supply.“The interest is still here and I don’t seeprices dropping unless private indivi -duals find the need to sell.

“Yes, we are seeing some vultures cir-cling around looking for opportunitiesbut I don’t see such opportunities hap-pening in the short term, if ever,” he said.

TECHNOLOGICAL LEAP

Miguel Palmeiro says that VilamouraWorld has had to adapt very quickly, withArtificial Intelligence (AI) and digitaltechnology coming into the business fastas a result of Covid-19, with online view-ings, webinars and virtual launches whileconstruction has continued as normal.

“Our clients are the most importantaspect for us and we’ve been giving themupdates and news about the new onlinetools that we have developed.”

Palmeiro does not think prices willdrop dramatically, if at all, because thereis no market over surplus. “Real estatehas a long-term cycle and we don’t makesnap decisions over an event like Covid-19. We have to see how this evolves overtime, but we have made a leap with tech-nology which will make us more efficientwith clients and partners.”

BOUNCE BACK IN DEMAND?

While it is difficult to predict whatwill happen post Covid-19, Fine &Country’s Tiago Chaves sees the reco -very being more of a gradual U-shaperather than a sharp V-shape with “clientsgaining confidence gradually.”

The estate agent believes that withall the good press and internationalawards Portugal has won over the pastfew years, and more recently the inter-national praise it has garnered for theway it has handled the crisis, will all con-tribute favourably, particularly the latestaccolade from Forbes magazine whichtrumpeted Portugal as the ‘Best place tolive and retire post Covid-19’.

Moderator Andrew Coutts of theILM Group, a sustainable property andresorts development consultant, says itis important to remember that the Algarve residential property market isnow “very balanced in terms of supplyand demand” which is a positive post- financial crisis legacy as investors arecareful not to overdevelop.

Tiago Chaves thinks that for thoselooking for a holiday property therewould not be significant changes in theirrequirements for a low-maintenance,easy-lock up and go property, with pooland beach proximity and amenities, aswell as investment return potential.

There may be, he says, a change indemand in the residential market with ‘relocaters’ who will be more specific andselective in their requirements for good-quality homes with more space, highspecifications standards, including insu-lation and energy efficiency and good internet connection. And these will notnecessarily be looking for properties in re-sorts, but increasingly in the community.

Miguel Palmeiro says that the biggestshift for resorts will be for more human-centric developments where people willbecome the protagonists when buyingproperty. There will be more remoteworking and meetings and therefore anadaptation to a hybridisation of homespace as properties serve multiple func-tions as home, office and holiday retreat.

“We will see more cost effective,technology-driven construction, the in-dustrialisation of the manufacture ofconcrete and other materials with pre-fabricated modules and units being putinto place” he says.

“We will also be using 3-D techno -logy, and in terms of customer relation-ships we will also see the importance of‘gamification’ where screen-by-screenwith the client we can decorate the entire home so when they arrive they willbe able to immediately close the deal,”Miguel Palmeiro concludes. �

“I THINK WE HAVE TO ESTABLISH A DIFFERENTIATION ON PRICING DEPENDING ON SECOND HAND OR NEW BUILD PROPERTIES. REGARDING SECOND HAND, IT DEPENDS

ON THE NEED FOR INDIVIDUALS TO SELL”

MIgUel pAlMeIro TIAgo ChAveSgAvIn SCoTTAndrew CoUTTS


Essential Tourism

Portugal’s tourism industry hasbeen hit by a triple blow as a re-

sult of Covid-19. First, as an economicactivity it has, like all sectors in Portugalsuffered in terms of wealth creation andemployment.

But it is arguably suffering more thanother economic activities because it isthe last activity to open up after confine-ment in terms of hotels and local accom-modation which were effectively closedfor three months.

But it has also suffered in terms oftourist demand since borders havelargely remained closed and will do untilJune while air transport has stridentrules in place which reduce flights andpassengers numbers, not to mention therestrictions in place in Portugal’s maintourist source markets overseas, particu-larly in Europe, and generalised fearsover travelling and holidaying abroad.

Not only that, there will be a struc-tural change in how humanity will viewtourism with many people not wantingto travel or be in cities as fear takes overmuch as it had done after 11 Septemberattacks in New York.

PROMOTING A LOW-RISK

DESTINATION

It is natural that the hotel sectorwould pursue a policy of more hygieneand sanitisation but the question is doesPortugal have the conditions to preserveits tourism sector during the confine-ment and aftermath period?

Former Secretary of State for TourismAdolfo Mesquita Nunes thinks so. “Thissector will suffer more than the othersand for longer which demands a specificrecovery programme for the sector”.

Essential Tourism


Nunes says that if the Governmentand all players involved at national andlocal levels can’t preserve sector, the ef-fects on Portugal’s economy in terms ofjobs and revenues will be dire and extendfar beyond just the tourist sector itself.

“It will impact people’s lives becauseof its huge importance to the economy,”he says, adding that the authorities needto project the perception that Portugalhad successfully tackled the crisis andcan offer holidays that are relatively safeand risk-free form a public health pointof view.

Luís Correia da Silva, President ofthe Portugal’s National Golf Federation(CNIG) says the impact of the pandemichas been “brutal” for the Tourism indus-try, for the companies and hotels in thesector that rely on it and the economyas a whole.

“We’ve faced nothing like this in pastmemory and although we have gonethrough various crises, I can’t rememberanything remotely like this,” he says.

“We have the perception that this crisis is having a huge impact on familyincomes and this could determine signi -ficant changes in the spending habits oftourists and how they will travel in thefuture,” he adds.

THE IMPORTANCE OF TOURISM

On the positive side, and for the firsttime in Portugal, both politicians and thegeneral public have a more precise ideaof the size and importance of the tourismand travel sectors for Portugal and therelevance that it has in terms of its directand indirect economic importance for allthe economic activities that work in thenetworks linked to it.

“I think this surprised a lot of people.From one moment to the next people un-derstood that a vast amount of peoplewould pay a heavy price in an area thathas been trumpeted for its success, butnot always taken seriously by some econo -mists,” says the Golf Federation chief.

Portugal, Correia da Silva says, has aperception of being extremely dependenton tourism and the hospitality sector,and yet all the business people, the mu-nicipal councils, and all those involvedin the sector have successfully met an international demand, promoting diffe -rent regional destinations and varioustypes of tourist products.

He says that in the coming months itis evident that the first tourists will bePortuguese and those foreigners alreadyliving in Portugal.

“These are very important for the residential leisure market. These second-home non-habitual residents are vitalin building the perception that Portugalis a safe country for their fellow citizensoverseas to come on holiday to visit”he says.

THREE-PHASE RECOVERY

In terms of tourism market recovery,Portugal will go through three or fourphases: 1) Portuguese tourists and over-seas residents living in Portugal holiday-ing in June, July and part of August; 2)As airlines begin to resume limited ser -vices there will be some reduced capa -city for overseas tourists coming toPortugal from August and September; 3)Regarding long-distance markets such asthe US, Brazil and Africa, these touristswill probably only return from Novemberand December and into 2021.

Tourism and the day after Covid-19

what needs to be done?

The tourism and tourism-related property development sectors in Portugal have been hard hit by the Covid-19 crisis, but there is room for cautious optimism providing the government opens up the tourism sector now and provides a package of fiscal stimuli to help struggling companies, developers and guesthouse owners in the sector survive.

Former Secretary of State for Tourism, Adolfo Mesquita Nunes, the President of the Portuguese Association of Real Estate Investors and Developers (APPII), Hugo Santos Ferreira, the President of the National Golf Industry (CNIG)

Luís Correia da Silva, and the Co-founder of the Local Accommodation Association of Portugal (A Loja do AL), Carla Costa Reis discuss what needs to be done.

TExT CHRIS GRAEME


Essential Tourism

What worries Luís Correia da Silvamost, however, is the situation in theUnited Kingdom which is Portugal’smost important overseas market fortourists, particular for the Algarve,Madeira, Lisbon and Porto and theNorth.

“If the situation does not improvesoon in the United Kingdom we will facemore difficulties than we have had before,” he said, adding that the situationinvolving the Spanish market was alsodeeply worrying.

The tourism sector in Portugal has aparticular weakness, in that it consistsof relatively few large economic groups,most in a strong financial position, butmany more smaller ones that haveconsiderable exposure in terms of fi-nancing and credit, both regardingtourism projects that are operating, and

Essential Tourism


others that are preparing to come on linein the future.

A grand swathe of the tourism ismade up of micro and small and mediumsize companies (SMEs) and it is theseplayers that are facing the greatest diffi-culties when it comes to making surethat the restart takes place in conditionscapable of attracting tourists while pro-viding quality services.

“The coming months will be verycomplicated, with very low hotel uptakerates across all offer classes, from hotelsand local accommodation to golf resortsand convention centres. All areas linkedto tourism will suffer reduced demand”says Correia da Silva.

“These companies can hold on fortwo or three months with some capacitywith financial support from the Govern-ment, but if the situation continues

longer than this, a whole host of thesecompanies will not be able to survive, orwill make many of their staff redundant”he warns.

“It is very important that this Govern-ment introduces measures to help thesecompanies over this two to three monthperiod,” he adds.

LOCAL ACCOMMODATION

Carla Costa Reis, Co-founder of theLocal Accommodation Association ofPortugal, is in no doubt that many ofthose running guest houses aimed attourists are having to turn to the residen-tial rental market as tourists dry up.

“We are going through a very chal-lenging situation and from 15 Marchlocal accommodation landlords began receiving cancellations for bookings thathad looked to represent a significantcontribution for the tourism sector in2020” she says.

In March turnover fell 40%, whilein April cancellations in many areasreached 90% and in May to 0 bookingsvirtually across the board.

“This is a sector is particularly sea-sonal, and even in Lisbon and Porto wehave four good months and eight off- season months, and have to make ourmoney in the summer months to offsetthe long winter months,” she stresses.

“Considering that we are a sectormade up of small micro-companies, it isnormal that the first impact would be onour cashflow situation, and no one wasprepared for the impact of this Covid situation, particularly when you take intoconsideration the investments in renova-tion and adaptation works undertakenby the landlords,” she adds.

Carla Costa Reis says that most ofthese landlords have no savings to getthem through the crisis and the wintermonths that follow, and with water, elec-tricity and tax obligations to pay, even themeasures proposed by the Government,which are loans, would not be enoughto make up for the loss of tourists andrevenue caused by the crisis.

“The truth is we don’t have readycash and that’s a problem, while manyapartment owners in local accommoda-tion were excluded in the State Budgetfor 2019 for social security which meansnow they can’t even claim that. Theyhave been excluded from any kind of

“WE HAVE THE PERCEPTION THAT THIS CRISIS IS HAVINGA HUGE IMPACT ON FAMILY INCOMES AND THIS COULDDETERMINE SIGNIFICANT CHANGES IN THE SPENDINGHABITS OF TOURISTS AND HOW THEY WILL TRAVEL IN THE FUTURE.” LUÍS CORREIA DA SILVA - CNIG

"IF THE GOVERNMENT AND ALL PLAYERS INVOLVED AT NATIONAL AND LOCAL LEVELS CAN’T PRESERVE THE SECTOR, THE EFFECTS ON PORTUGAL’S ECONOMY INTERMS OF JOBS AND REVENUES WILL BE DIRE AND EXTEND FAR BEYOND JUST THE TOURIST SECTOR ITSELF AND WILL IMPACT PEOPLE’S LIVES”. ADOLFO MESQUITA NUNES

financial help set aside for the compa-nies sector,” she complains.

This has led to local accommodationlandlords having to rely on loans, andeven then, with the season effectivelycancelled, and the prospect of winterahead “who is going to have the confi-dence to borrow more money from thebanks to keep going until the springof 2022?”

However, she does praise the excel-lent promotional work done by the Portuguese tourism board, Turismo dePortugal, with its campaign ‘Can’t skiphope’ as well as Department of Health’s(DGS) sanitary measures prepared forlocal accommodation which represents“an increase in confidence for both national and international tourists, whichmeans we will be seen as having the sanitary conditions in place to safely welcome them”.

CONVERT TO RENT

One solution is to convert theseguest houses into accommodation forrent to individuals and families in orderto meet the chronic lack of affordablehousing in the centre of Lisbon andPorto and other large cities that normallyattract tourists.

But there is a problem for many. “Ourmembers can’t simply convert from localaccommodation to residential rental because they don’t have the money to payfor the fiscal obligations required to doso. Basically, they have a ball and chainaround their legs, especially because ofthe oscillations in taxes our members willhave to pay moving from one segment tothe other” she says, pointing out that theowner runs the risk of paying in IRS taxalmost the entire amount they hadearned in tourism receipts throughouttheir activity as a guest house.

“Obviously, our members are terrifiedwhile all this remains uncertain and faceconsiderable tax risks by converting theirproperties from local accommodation toresidential rental use” she adds.

In fact, in the State Budget for 2020there was an effort to correct this injus-tice, providing the property will be putout to residential rent for five years onbeing taken out of local accommodation.“There is no confidence on the part oflandlords or tenants to take out a five-year contract,” she stresses.

REAL ESTATE NEEDS

TO BE RESPECTED

Hugo Santos Ferreira, Vice-Presidentof the Portuguese Association of Real Estate Developers and Investors (APPII)points out that real estate investors anddevelopers represent 15% of nationalGDP and captures €30Bn in investmentfor Portugal per year, similar to the

amount generated by tourism. He la -ments that the real estate sector in Por-tugal has been treated as the poorercousin to tourism by the Governmentbecause it “isn’t so sexy”.

The sector, in his opinion, had beenvital for the Portuguese economy in at-tracting overseas investment to Portugal,including development projects aimed at


Essential TourismEssential Tourism


tourism, while the investors themselvesoperating and living in Portugal, inclu -ding Non-Habitual Residents andGolden Visa holders have representedan annual investment attraction ofaround €5Bn. To give an idea, since theend of the last financial crisis in 2013-2014, €25Bn has come into Portugalvia these investors.

The APPII also represents hotel developers and owners and indirectly theinterests of local accommodation whichis also linked to the real estate sector.

“We are navigating unchartered waters, the times are uncertain now, butin the short term we have companiesthat are capitalised, highly professional,and which are trying to survive from theircash reserves and cashflows, but havenaturally suffered from falls in revenues,

yet even so they have managed to retaintheir activities active despite this falloffin revenues," he points out.

In terms of property sales and rents,there has been some decline for patrimo-nial entities, but on the activity side, theconstruction sector has seen its projectsthat were underway, continue. There hasbeen a decline in new projects, but themajority of overseas investments saythey will continue to invest, and theseoverseas investments represent 50% ofPortugal’s real estate investment and developer players, including the largestinternational funds.

Says Hugo Santos Ferreira, “We arepleased to report that we are seeing anappetite and intention from these over-seas investors to continue to invest inPortugal. The majority of these interna-tional funds, despite this uncertainty, seethe prospects for recovery within six to12 months.”

And in a time of crisis, the real estatesector has found an opportunity to turndigital and put sales online, with manyhigh-end investors, viewing and buyingproperty and even completing salesall online.

“The activities of these companiesserving the upper middle class markethas managed to continue because thereal estate sector today is much betterprepared than it was in the last crisis. Wedon’t see the kind of slump that we hadseen in the Great Recession becausethese players are less in debt and usingfewer loans,” says Santos Ferreira.

The APPII vice-president points outthat the majority of real estate invest-ment in Portugal following the crisis wasnot as a result of internal demand sincecompanies were not well capitalised. Wehad to mostly look to overseas invest-ment which is less affected by nationalslumps,” he adds.

LONG TERM OUTLOOK

Hugo Santos Ferreira believes thatthe outlook for the real estate develop-ment market in terms of tourism andother property sectors is “cautiously optimistic”.

“Speaking to construction companiesand developers, they say the commit-ment on the part of international finan-ciers and funds has not gone away”.

The APPII vice president insists thatPortugal’s real estate sector can once

again help kick-start the Portugueseeconomy after Covid-19 because it stillhas the existing real estate investmentfrom funds. He emphasises that it is important for the Government not to forget these companies like it did duringthe Great Recession.

“Our companies will be able to with-stand two of three months with the cashthat they have, but will not cope withmany more months than that withoutcashflow coming in,” he warns statingthat the sector must not be overlookedby the Government in terms of emer-gency help and a raft of measures.

Hugo Santos Ferreira explains thatPortugal’s real estate development sectorhas so far had no help whatsoever fromthe Government’s emergency funds, letalone any of the tax breaks the APPII hascampaigned for, for so long.

These include tax incentives such asreducing VAT to 6% to encourage deve -lopment, particularly for much needednew-build homes for the Portuguesemiddle classes, tax incentives withoutwhich, considering the sector’s impor-tance to the national economy, don’tmake sense.

“If we want to continue to captureand maintain overseas real estate invest-ment, developers need to be able tostartup again immediately, investorsneed to be told they are very welcome inPortugal, Golden Visa applicants shouldbe welcomed in this country, and wehave to make the real estate market attractive again for both investors anddevelopers,” he said.

TAX AND RED TAPE

Part of the problem is that the risingcost of building materials, the high costand lack of manpower and Portugal’s con-tinued resistance to reducing red tapeand high taxes makes it almost impossi-ble for a developer to build new afford-able residential homes and make a profit.

The APPII, to this end, has set up aprogramme called “Relaunch the Eco -nomy” with a number of measures thatthe sector needs. These have been divided in temporary measures until theend of the year, and more medium tolong-term measures.

These include a suspension or reduc-tion in the property taxes IMI (PropertyTax) and IMT (Municipal Tax on Pro -perty Sales) to help provide liquidity for

the companies to get back to work andcontinue.

Also, an extension of the moratoriain fiscal terms as well as suspending administrative deadlines on licensingand planning permission applications,including the three-year property resalefiscal deadline.

Third, speeding up and streamliningmunicipal urban planning permissionprocesses whose current red tape is theone singe aspect that most puts off over-seas investors.

Four, make long-distance propertydeals legally viable because of the cur-rent exceptional circumstances, eventu-ally paving the way for online planningpermission and contract processes.

“THE REAL ESTATE DEVELOPMENT SECTORHAS SO FAR HAD NO HELPWHATSOEVER FROM THE GOVERNMENT’SEMERGENCY FUNDS, LETALONE ANY OF THE TAXBREAKS SUCH AS A 6% VATLEVY ON NEW BUILDINGPROJECTS WHICH THEAPPII HAS CAMPAIGNEDFOR, FOR SO LONG”. HUGOSANTOS FERREIRA, VICE-PRESIDENT OF THE APPII

“THE TRUTH IS WE DON’T HAVE READY CASH AND THAT’STHE PROBLEM, WHILE MANY APARTMENT OWNERS INLOCAL ACCOMMODATION WERE EXCLUDED IN THE STATEBUDGET FOR 2019 FOR SOCIAL SECURITY WHICH MEANSNOW THEY CAN’T EVEN CLAIM THAT. THEY HAVE BEEN EXCLUDED FROM ANY KIND OF FINANCIAL HELP SET ASIDE FOR THE COMPANIES SECTOR”. CARLA COSTA REIS, CO-FOUNDER A LOJA DO AL

Other measures the APPII vice pres-ident suggests is an exemption or exten-sion period to pay IRC tax due by July2020 (regarding 2019 fiscal year) and asuspension of capital and interest pay-ments on real estate investments for aperiod of six months.

In conclusion, Portugal’s industry hassuffered across the board and the Gov-ernment expects a recession that willwipe of over 7% of her GDP in 2020.

But Portugal’s tourism and real estatedevelopment sectors are a vital driver forthe economy both in terms of gettingPortugal’s economy going again and assu -ring its long-term future. It is time, saythe players, to start treating the two withthe respect their importance deserves. �


Essential Opinion


Challenging times reveal true leaders and unmasks those whohave disguised themselves well.

Just ask the many company employees that are teleworking rightnow who are more often than not sharing confined spaces at homewith their children, who are doing online lessons and have familymembers in risk groups, but are not feeling like they are getting anysupport from their bosses or worse, their bosses are making theirlives even more difficult.

or ask a frontline employee who has to cope with the public ona daily basis, and a cowardly boss who doesn’t get involved whenthe tough gets going which inevitably happens, and now morethan ever.

In challenging times like these, the leading role of a boss is moreimportant than ever.

The bosses too are also very often overloaded with work, whichthey didn't have to worry about too much before because theprocesses they were working with were, for better or worse, definedand workable. Now everything has changed, and is new and a lot ofextra and unexpected responsibilities have fallen on their shoulders.

Meanwhile some things have not changed. The boss’s main responsibility isn’t doing reports with pretty

graphs or responding to complaints. The main responsibility now,more than ever, is knowing how to manage his team.

And many bosses, as cogs in a well-oiled corporate working machine go unnoticed in ‘normal times’. They may not be brilliant,but they will be fulfilling their role with reasonable competence, atleast in everything that doesn’t involve people management.

The difference between being a boss and a leader in times of Covid-19

If the economy is working, the team has a good working environment, and the company is half decent, the boss can copewith rain showers and simply let the team get on with doing theirjob while staying in his office answering e-mails and calls as theycome in.

The team may not even think that much about this boss, butprefers him to the one from the morning shift who creates a bad atmosphere, or even to the one who is super demanding and whodoes the night shift, and who is preferred to all the others.

But these times are over. The ‘okayish’ boss now isn’t goodenough.

For all the more new requests that he now gets, the boss’s mainrole is to make sure that his team does the best possible effort withthe resources that they have.

And each member of the team is facing fresh challenges, manynot undertaken before and few of them clear, but challenges that always imply the need to have guidance and clarity on the partof their boss.

But doesn't the boss himself have much information about thecompany’s future? It is preferable to be clear in relation to this, sharing the little that he does know rather than simply not talkingabout the matter?

Doesn’t the boss have his entire team at home, and so each onehas to go about doing their work? No! It is up to the boss to regularlycontact the members of his team and not just via email. The email isthe means of communication that is the most impersonal and whichcreates countless misunderstandings, and yet has a pivotal role in information management.

But the e-mail is dreadful when it comes to creating a groupspirit, or listening to the team’s needs. If the boss uses email for this,then the team might just as well speak to a robot than the boss.

By maintaining the personal touch while at a distance from employees, chat, video calls, telephone calls and even social networks, can be effective ways of communicating, while notexactly the same as face-to-face contact, can actually help tomake the team feel more supported.

"BY MAINTAINING THE PERSONAL TOUCH WHILE AT A DISTANCE FROMEMPLOYEES, CHAT, VIDEO CALLS, TELEPHONE CALLS AND EVEN SOCIALNETWORKS CAN BE EFFECTIVE WAYS OF COMMUNICATING. WHILE NOTEXACTLY THE SAME AS FACE-TO-FACE CONTACT, THEY CAN ACTUALLYHELPTO MAKE THE TEAM FEEL MORE SUPPORTED”.MANUEL ALÇADA, EXECUTIVE DIRECTOR HAPPY WORK.

Manuel Alçadaexecutive director of happy work

It’s one thing being a ‘Sr. Doutor,' but quite another whenit comes to effectively managing teams and being respected as a leader in times of Covid-19 than takinghome a fat cheque. Executive Director of Happy Work,Manuel Alçada, a consultant and coach in customer service, sales and leadership explains why.

1. To your team aligned, keep it as well informed as is possible. Information that there is about the future of thecompany, even if it isn’t that positive, should be sharedwith the team. It’s better they hear what you’ve learntfrom your own lips than hear it from whispering voices inthe company’s corridors that they may not believe, butwill fuel more speculation than ever.

2. hold regular team meetings, even if in small groups, tomaintain the group spirit of cooperation which is nowmore necessary than ever.

3. Be understanding in relation to the specific needs ofeach team member — it’s not worth insisting on a rigidhourly turn, for example, if your employee clearly can'twork at specific times of the day because they are doingthe lunch for the kids or settling them down for bed.

4. give feedback to each one about their performance. Ifyou can’t manage that, from everything you know that’sgoing on, form an opinion on their performance, impartinformation from what you do have about their little successes (and failures) that you can make out.

5. go from being the passive listener to an active one.Being a good listener is always a good quality. But nowone should do so actively. Ask people directly if every-thing is fine, if they need anything from your side.

So what can be done in this phase? One doesn’t haveto be that mega-guru leader that you read about in allthe management magazines and who a few years downthe line falls into obscurity. But here are some tips thatmay help:


Essential Industry

There is no doubt that Portugal’s corkindustry is an important agricul-

tural sector which employs around 8,310employees in 685 companies nationwide.

Of that, 72% goes into making wine,port and champagne corks - 40 million ayear in fact — while the industry is res -ponsible for approximately 1% of Portu-gal’s total exports having grown on averageby 4.5% annually for the past 10 years.

Collectively, Portugal’s cork industry,like most others, is facing an unprece-dented challenge caused by the Covid-19 pandemic, although through Marchand April production remained stable.

However, with restaurants and hotelsclosed around the world, and tourism ata standstill, the expectation is that out-put will decline in line with orders aswine sales serving the hospitality andcatering sectors plummet.

In a webcast organised by AON Portugal, its CEO Pedro Penalva talks toJoão Rui Ferreira, President of APCOR(The Portuguese Cork Association) andCEO of cork manufacturer WaldemarFernandes da Silva SA on how the pro-duction and supply chain has been affected by the downturn caused by theCovid-19 pandemic.

THE IMPACT

The impact of the Novel Coronavirushas been felt by Portugal’s industries invarious ways and to different degrees ofintensity. Based mostly in Portugal, thelocal cork processing industry has mana -ged to instigate various contingencyand risk management measures to dealwith the eventuality of any supply chains

Essential Industry


having to shut down. However, so far,there has been no disruption in theclient supply and delivery chain to date.

João Rui Ferreira says that the corkindustry operates within a panorama ofglobal competition, but has contingencyplans in place if there should be a pro -blem in supplying its clients, and in par-ticular to those within the wine sector.

However, supply chain problemsmight not come from other wine sectorcompetitors, but rather other types ofcompetitors in other sectors, many over-seas. Problems from the supply of pack-aging and wrapping, tapes, logistics and,

ultimately, the final hospitality clientssuch as the hotels, restaurants, bars andevents that represent an overwhelmingslice of customers catering to consumerswhich now aren’t there.

“We have always tried to keep oursupply lines open and we’ve achievedthat despite knowing that at any momentthere could be a disruption in the supplychain logistics. However, in some of thecountries worst affected by the crisis,like the United States, France, Spainand Italy, the wine production chain hasbeen maintained and prioritised becauseit is seen as part of an essential agri -cultural sector and so has not seen its activities suspended” says the AOPCORpresident.

HEALTH AND HYGIENE EFFECTS

In terms of the raw material, cork hasto be harvested during a season whichruns from mid-May to mid-August de-pending on weather factors and whilecork oak growers don’t have a problem interms of its forthcoming ‘extraction’ cam-paign going forward, estate visits will goahead as normal albeit with some socialdistancing contingencies while “trying tokeep things as normal as possible”.

And although reps and sales agentshave been restricted by lockdown andtravel constraints, most of WaldemarFernandes da Silva’s 8,000 employeeshave continued working since for mostof these factory workers teleworkingfrom home is simply not an option andthe only physical measure that hadbeen adopted is the use of protectiveface masks.

Covid and the factory floorhow Portugal’s cork industry is adapting

Portugal’s cork industry is worth around €990Bn a year in exports with 95% sold to 130countries around the world, 72% of that going to European countries. But how far has theindustry been affected by the Covid-19 pandemic and what are the prospects for the future?

TExT CHRIS GRAEME

“The difficulties most felt within theindustrial factory environment were thecoffee breaks, going to the bathroom andsocial interaction moments, so regulatingsocial distancing has not been easy interms of limiting who and how manycould go for lunch at a time” he says.

In fact, Ferreira believes that thesesocial distancing rules, if they become aregular feature or the new normal, couldcall into question “the very concept ofteam spirit philosophy”.

“We’ve had to change the rules go -verning morning meetings and the staffadapted very quickly” he says while ad-mitting there had been “some difficultiesinitially accessing PPEs (Personal Protec-tive Clothing), masks, visors, gloves anddisinfectant items such as gels.

Other measures that have been putinto practice include voluntary lock-down for staff who had been recentlyoverseas, and the cancellation of over-seas business trips by reps and salesmanagers — but hardly surprising giventhe airlines situation.

The APCOR president also mentionsthat he has closely studied the measuresthat had been announced by the Govern-ment in March and believes that someof them need to be more detailed andspecific in terms of how they will be employed and adapted over time.

“Journeys weren’t a particular pro -blem since most staff live fairly close tothe factory” he says, adding that in thefirst phase it was left to the individualcompany to decide the degree of inten-sity while having to deal with the mixedmessages of “stay at home” but the “machines cannot stop” and which reflects the Government’s dilemma ofbalancing people’s health and the healthof the economy which sustains theirlivelihoods.

Ferreira says that obviously there willbe a new contingency framework in general for dealing with pandemics inthe first instance, since before pan-demics were low down on the scale ofrisk assessments to business.

“On the whole, industries were notprepared for a pandemic before Febru-ary, but now all industries, includingours, will now have to be prepared interms of risk management and havingthe capital and financial structure towithstand a temporary crisis such as thisone will be decisive in future” says theAPCOR president.

DEALING WITH FALLS IN ORDERS

AND PRODUCTION

João Rui Ferreira says that in termsof demand — and clearly this will varyfrom sector to sector — orders have notyet been cancelled for his company andthose of his association members.

There have not be big disruptionsand both wineries and cork manufactu -rers are continuing as normal. The bot-tling lines have not stopped, despitesome operational and logistical changes.

However, a reduction in demand,and consequent production, may well,he says, be inevitable since 60% of theworld’s wines are sold though the restau-rant and catering wholesale channelHoreca which serves hotels, restaurantsand bars whose activity had fallen to almost zero.

And the increase in off-licence andsupermarket wine sales, as people arestuck at home, has not compensated thesales to the hospitality sector, with re-ductions of around 50% in Europe andthe US. The traditional retail outletssimply cannot absorb all this loss.

“Up until to a few weeks ago, we really didn’t feel any effects but, and thisis speculative, we could eventually feelthe fallout from a falloff in demand goingforward, although in terms of the open-border policy between Spain and Portu-gal for the circulation of goods and rawmaterials, apart from some temporary situations, supply and production capa -city looks unlikely to be affected” he says.

As for packaging, since this is donelocally as subsidiaries are spread aroundthe world, the issue of packaging andwrapping is managed on the ground bythe client, and so far cork producershave not encountered specific feedbackon problems.

“Providing there is not a second waveof the pandemic in the winter affectingSpain, Italy and France, and economiesstart to open, I do not anticipate prob-lems in terms of components and pack-aging supplies” he says, stressing thatrisk and contingency management interms of stock will have to be reassessedand redesigned.

OPPORTUNITIES FOR

MODERNISATION

With a huge change in industrialparadigms worldwide, the cork process-ing industry is no exception when itcomes to technological and innovative

manufacturing processes involving AIand digitalisation.

Cork is a national, but also a globalpatrimonial asset, with a huge impact socially, culturally and economically forthe communities it sustains and there-fore a territorial responsibility.

“It is one of the few activities in cer-tain areas of southern Europe and NorthAfrica which creates the economic secu-rity vital for social cohesion, as well as animportant sustainable ecological and environmental heritage, one whichAPCOR has, in its role as a facilitator,driver and guardian of this rich agricul-tural heritage, worked hard to maintainand preserve” Ferreira explains.

This includes factors such a protect-ing bio-diversity, maintaining a barrierbetween forest and desert, preventingthe latter encroaching on the former, aswell as water management and all theother responsibilities these factors bring.

Repetitive processes have been auto-mated and digitalised, business modelsand production processes are being mo -dernised, and the industry was alreadyworking within this mindset well beforethe Covid-19 crisis which, he believes,will only serve to strengthen and act as acatalyst to speed up the technologicalchanges to the sector.

In terms of business innovation too,the association has launched program -mes in the recent past aimed at creatingand supporting startups in areas as di-verse as fashion, architecture and thefoodstuffs industry, as well as promotingbusiness models that are more geared towards technological and internationa -lisation processes.

“In terms of progress and APCOR’Srole as facilitator, there needs to be moreeducation, transparency, knowledgesharing and showcase success stories”he says.

“One of the lessons Portugal needs totake away from this crisis is capitalisingon the great image we now have in theworld because of the way we have tack-led the Covid-19 pandemic and add thatto the fact that we had already experi-enced and successfully overcome aneconomic crisis and harness this experi-ence to further make our economy morespecialised and niche” he concluded.

*This article is based on a webinar organised by AONPortugal - a large global professional services companythat sells financial risk mitigation products — in conjunction with the American Chamber of Commercein Portugal (AmCham). �


Essential Bi-lateral relations

Until March this year Ireland andPortugal had both been in a

strong economic position. Portugal’sGDP was up 2.2% by the end of 2019while Ireland enjoyed growth of 1.8% toDecember that year.

Portugal exports from Ireland stoodat US$419 million (€376 million) in2019 according to the United NationsComtrade database on Internationaltrade while Ireland exports from Portugalwere already worth €1Bn includingtourism by last year according to Portu-gal’s external trade agency AICEP.

The main products were pharmaceu-tical, iron and steel, vehicles, electrical

Essential Bi-lateral relations


and electronic equipment, plastics, woodproducts, organic chemicals footwearand paper-based articles but tourism andhospitality sector products and servicesare also hugely important.

Then came Covid-19 and despite almost total paralysis, both the govern-ments and health authorities of Irelandand Portugal have reacted well to bring-ing an ongoing and challenging publichealth situation under control.

“I’ve been struck by how the Ireland-Portugal Business Network (IPBN) hascontinued to grow and develop, as wellas the exchanges on how the networkwould have to change, develop and adapt

further over the next year and beyond,”said Ireland’s Ambassador to PortugalRalph Victory.

In Ireland negotiations are underwayfollowing a general election in Februarywith the current government publishinga roadmap for reopening society andbusiness to ease Covid-19 restrictionsfor Ireland’s economy and society in afive-phase approach to increase eco-nomic and social activity.

The ambassador said that in econo -mic terms the challenges involved are“stark”. As outlined in the stability pro-gramme update published by the Irish Fi-nance Minister Paschal Donohoe on 21April, Ireland’s GDP is projected to fall10.5% in 2020. Portugal’s economy is ex-pected to contract between 9% and 15%.

Unemployment in Ireland is ex-pected to reach 22%, while the govern-ment deficit is projected to be €23Bn or7.4% of GDP. Ireland’s recovery in thesecond half of 2020 will hinge on suc-cessful containment of the virus.

The target for 2021 is to achieve 6%GDP and for unemployment to fallbelow 10% with economic activity reach-ing its pre-crisis level in 2022. “The jour-ney will be difficult but Ireland faces itfrom a position of strength,” said Ambas-sador Victory.

“Our economy had been performingwell throughout 2019 and the earlymonths of 2020, both in terms of domes-tic economy and exports and all of thisstrengthens the Irish position in terms ofthe current challenges,” he added.

Ireland and Portugalstanding shoulder to

shoulder in times of crisisIrish Ambassador to Portugal, Ralph Victory says that despite the inevitable downturn,

Covid-19 could bring business opportunities for the two countries in the online, medical, manufacturing and hospitality sectors and services during a webinar

with the Ireland-Portugal Business Network (IPBN)TExT CHRIS GRAEME

Maintaining this economic resilienceis essential for the Irish economy andsteps have been taken towards this including a €250 million restart fund,with up to €10,000 each for micro andsmall businesses and a three monthwaver for local taxation and a €2BnCovid-19 stabilisation and recovery fundfor medium and large enterprises.

There is also a further €2Bn creditguarantee scheme to support lending toSMEs repayable from three months tosix years at below market interest rates.In addition, business tax has been ware-housed for a period of 12 months inwhich time no debt enforcement actionswill be taken by the Irish authorities andno interest charged.

Despite the differences betweenthe two economies, there have beensome similarities in the Covid area withPortugal being ahead regarding its tim-ings plan for reopening. “The Portu -guese economy, like Ireland’s, had beenperforming well before the pandemicwith a range of measures adopted tosupport businesses and workers alike,”said Victory.

And continued, “Portugal has deser -vedly won international praise for itshandling of the Covid-19 crisis, and wewish the Portuguese every success asthey undertake their own reopeningmeasures now that they have begun”.

EU INVESTMENT

Ralph Victory says that the two coun-tries’ membership of the EU will be another key element in their economicrecovery; measures which include a€540Bn package and instruments allow-ing EU governments to spend up to 2%of their GDP on emergency economicand healthcare measures which amountsto some €240Bn.

Another EU instrument allows for€200Bn of finance for companies, par-ticularly SMEs, and a €100Bn employ-ment insurance scheme.

The European Central Bank too haslaunched a temporary massive purchaseplan for private and public sector secu-rities with an overall budget of €750Bn.

The European Commission has putforward its proposal for a recovery fundwhich will have a combined investmentof €1.85Tn to 2027 and is designed to

kickstart Member State economies bysharing priorities and bolstering solidarity.

BREXIT

The EU’s importance as a tradingbloc will be another vital ingredient toboth countries’ recovery and future, andthis has implications for Brexit. Thereare negotiations on a future partnershipand the implantation of a protocol —both EU-UK and a UK-Ireland protocolon the future of Northern Ireland.

“Its fair to say that these negotiationshaven’t achieved as much as Ireland andour EU partners would have wished”said Ralph Victory.

“Significant gaps remain between thetwo sides and further progress needs tobe made by June when the two sidestake stock. But the difficulties can besurmounted if there is the political will,realism and mutual respect,” added theambassador.

He added that Ireland would con-tinue to work with Portugal and EU part-ners to ensure that: “Our collectiveapproach to these negotiations reflectsour shared values and interests”.

IRELAND-PORTUGAL ECONOMIC

RELATIONSHIP

What will the Ireland-Portugal eco-nomic relationship look like? On theIrish side and through Enterprise Ire-land, the embassy and partners are work-ing hard to retain the existing exportconnections and prospects, while alsolooking to develop new ones. On thePortuguese side, the Portuguese exportand overseas trade and investmentbureau AICEP’s colleagues are doinglikewise.

“Clearly we can expect that the over-all economic downturn and publichealth related restrictions will effectconsumer confidence for some time tocome, particularly in the tourism and airtransport sectors, with knock-on effectsfor supporting services.”

“At the same time, there may be newopportunities arising in areas such asmedical research and devices and evenonline services and e-learning, manufac-turing, hospitality and tourism as thesesectors open,” he added.

Are these the opportunities that wecan engage in together? If so, what are

the best ways to go about doing that?How can we overcome the hurdles andchallenges that lie in our way, while atthe same time protecting the hard-wonprogress achieved so far?

“Clearly we want to see economic activity resuming as fully and as soon aspossible, and as part of that air connec-tivity and transport connections are veryimportant. It has to be done as the public health situation allows” said theambassador.

In the case of Ireland, the reopeningof the country is conditional on no newCovid-19 cases being imported but theplan is to reopen in a coordinated way assoon as public health considerationsallow. “Unfortunately, we are looking atmonths rather than weeks”.

EMBASSY’S ROLE IN TRAVEL

ARRANGEMENTS

“Our global advice is still to avoid allessential travel and it calls upon all of usto exercise judgement and responsibility.If a trip is absolutely necessary, that isunderstandable but people have to takeall the necessary precautions and the requirements for 14-day self-isolate arein still place and the exceptions are verylimited” says the ambassador.

Regarding the support to the Irish-Portugal Business Network from theIrish Department of Foreign Affairs, theIrish Ambassador to Portugal said it wasunlikely that the Government would beexpanding its budget for supporting busi-ness networks, but would aim to pre-serve as much funding as possible. �

“SIGNIFICANT GAPS REMAIN BETWEEN THE UK AND EU AND FURTHERPROGRESS STILL NEEDSTO BE MADE, BUT THE DIFFICULTIES CAN BE SURMOUNTED IF THERE IS THE POLITICAL WILL, REALISM AND MUTUAL RESPECT.” - AMBASSADORRALPH VICTORY


Essential Investment

Chitra Stern is probably the mostaccomplished and successful fe-

male entrepreneur in the tourism sectorin Portugal today.

The Singapore and British national ofIndian descent came to Portugal withher Swiss husband, property developerand visionary Roman Stern in 2001 be-cause one of the main business opportu-nities at that time were in hotels, resortsand real estate. They still are today.

In 2001 Portugal had been a memberof the EU for 15 years, infrastructurefunds were pouring in with new motor-ways connecting the country from northto south and east to west. Airports wereincreasing capacity while connectivitywas improved with the advent and

Essential Investment


spread of low-cost airlines revolutionis-ing travel in Europe.

“Portugal for us as foreigners was anundiscovered country in Western Eu-rope, but we discovered it was an amaz-ing tourism destination,” said Chitra.

Starting their business from the basement of their house they bought inLagos, their initial plan was to stay forfive years. Nineteen years down the line,with four children and a real estate port-folio empire later, the couple are stillhere and have advised the Portuguesegovernment on investment attraction.

Chitra says that there is no doubtthat Portugal is “trending” as a countryand tourism destination today. It hasamazing restaurants, talented chefs,

chic, cool boutique hotels, and lots of interesting products and brands. “Youknow you’re trending when magazineslike Monocle are writing about you” shestresses.

For the Sterns Portugal is an authen-tic country which is modern, Europeanand yet still has an old-world charmabout it. “Portugal has a huge history behind it for such a small country,” shepoints out.

“The thing that most amazed mefrom history was this venture capitalistfrom the 15 th century, Prince Henry theNavigator who poured the crown’s re-sources into the research and develop-ment of navigation. He can be creditedfor catapulting Portugal to punch above

Why Portugal is trendingChitra Stern, owner and founding partner of the Elegant Group of Martinhal family

hotels and resorts and the Lisbon United International School was invited by TEDx Funchal to provide insight as to ‘Why Portugal? - The real reason

Portugal has been attracting foreign investment.' TExT CHRIS GRAEME

it weight during the Age of the Disco -veries,” Chitra explains. This era boughta lot of wealth to Portugal for decadesand generations.

POWERED BY ECO

Portugal is in the forefront of sustain-able energy. For one month in 2018 Portugal produced enough power fromrenewable sources to sustain the wholecountry. “That is something to be proudof. There is a commitment going forwardto increase renewable energy productionand decrease reliance on fossil fuels”.

Most people, says Chitra, know it isa beautiful country. Portugal has over900 km of lovely coastline, amazing is-lands like Madeira and the Azores,hectares of cork and olive plantations,scenic vineyards, beautiful rivers andmountain ranges.“For years I havebeen calling Portugal the California ofEurope,” she says.

More recently, Portugal has been getting recognised for other factors:lifestyle quality which also means con-nectivity. Portugal is only seven-ninehours from the Western seaboard of theUnited States and Americas as well asthe Middle East.

“Portugal is only a few hours awayfrom other destinations in Europe andNorthern Africa. That is important for aforeigner who is thinking about relocat-ing. Lifestyle is also about convenience.Portugal has late-night and Sunday shopping, ease of access to goods andservices. Lifestyle is also living in a tem-perate climate throughout the year. It’snot too hot or cold, lots of sunshine andclean air,” says Chitra Stern.

Lifestyle is also about access to nature and high-quality food. It’s aboutliving in safety and security with Portugalranking highly on all these points.

EDUCATION

The Lisbon United InternationalSchool founder says Portugal is a greatplace for education. Portugal’s universi-ties turn out a high number of engineers,IT graduates and scientists that areneeded by many companies that havemoved or are thinking or moving to Portugal, while a high number of foreignstudents coming to Portugal for mastersprogrammes taught in English.

“Education can also become a suc-cessful export as it has for so many

other countries. An example is the NovaSchool of Business and Economicsat Carcavelos near Lisbon,” says thefounder of the new Lisbon InternationalSchool which opens this autumn.

Portugal has been getting exposure asa tech startup scene for some years. Butsince Web Summit, the world’s largesttech conference announced that Lisbonwould be its host city in 2016, the techstartup scene has been attracting a lot ofattention and indeed has been seeing immense growth.

“Portugal has had its first two uni-corns, companies valued at overUS$1Bn which have been focusing theworld’s attention, while Lisbon will beWeb Summit’s home for the next 10years,” the entrepreneur says.

The Portuguese Government hasalso introduced some measures to sim-plify procedures and processes by remov-ing red tape when it comes to venturecapital and private equity companies andcompanies that want to set up shop inPortugal.

It has also offered a series of invest-ment initiatives and incentives over thepast few years such as residence pro-grammes, startup and tech visas, tax incentives (flat rate of 20%) for Non- Habitual Residents, subsidies for filmproduction and Government co-invest-ment for startups.

These also include the Golden Visaand Green Visa and Startup Visa, andthere is no doubt, she says, that all theseincentives have bought lots of foreignersand immigrants, human and financialcapital to Portugal. Billions have flowninto the country.

“I have observed an emotional reasonin the eighteen years I have lived in Portugal and that’s the people. Portugalranks very highly on the Global PeaceIndex. The Portuguese are very welcom-ing to foreigners to whom they showwarmth and hospitality which is why thehospitality industry is doing so well.”

“Portugal is the most open, tolerantand liberal society I have ever lived in.People here welcome those from othercountries with other religions, beliefs,colours, and welcome them with openarms, and this is worth a lot, especiallyin today’s times. After all, we are humanbeings and not robots. We need to feelwelcome where we invest and live,” con-cludes Chita Stern. �

“PORTUGAL FOR US ASFOREIGNERS WAS ANUNDISCOVERED COUNTRYIN WESTERN EUROPE, BUT WE DISCOVERED IT WAS AN AMAZINGTOURISM DESTINATION.”CHITRA STERN, CEO ELEGANT GROUP


Essential Opinion


How is the crisis affecting the residential real estate sector?And will the recovery be quick when the crisis is over?José Araújo, Head of Real Estate at millennium bcp shedssome light on the market.

The current crisis, caused by the Corona Virus, brings many uncertainties, both in terms of when it will end and in terms of thefinal impact that will remain once the health problem is resolved. Thehealth effects are still with us and they are affecting all sectors of theeconomy: families, companies and businesses. And the real estatesector is no exception.

However, the real estate market is an experienced market thatemerged in better shape after Portugal’s economic and financial crisis that started in 2013. For this reason, at this moment, when thereare still many uncertainties, confidence is very important. I believethat the experience and trust that all the players operating in thismarket have accumulated will be essential to managing expecta-tions, with new approaches and new ways of doing business. We areall already working on that!

As in other areas, the real estate business has not stopped; onthe contrary, it continues active in all segments, despite there beingfewer transactions and with some delays in the contracting process.Possible buyers, for their part, have to analyse the possible post-Covid-19 scenarios, as regards employment and economic recoveryand, for this reason they longer to make decisions.

Because of my experience in the sector, and because of all theactivities of our business partners and customers, I feel the sector is

Confidence as a key factor in the real estate market

very much alive and will once again demonstrate that it be a drivingforce of the recovery. There will be changes, but they will be positiveas there is a palpable sense of optimism as to the development ofdecisive new technology and digital tools.

The technological evolution has already been incredible, fromvirtual and 3D visits, proposals via digital means, digital signatures,bank transfers, etc., etc. These are now realities and that is why busi-ness and proposals can flow even in times of social distancing.

As for prices, I am convinced they can stabilize, at first – indeed,that was already the market trend this year thanks to the arrival ofmore properties available for the national middle class, as well as thevarious plans to increase the supply of rental properties in city centers at controlled prices.

The market’s evolution will also depend on the promoters'greater or lesser health, because with the existing liquidity in themarket and the current low spreads, I do not believe there will be asnap reaction to lower prices drastically. Instead, they will try to defend as much as possible the values when marketing until we seea clearer recovery of the economy and employment.

Another factor the question of whether the same fiscal and political conditions will continue to exist in Portugal, in order tomaintain incentives for foreign and private investment. The real estate sector is responsible for the steady inflow of funds and jobsfrom abroad that have impacted the national economy since 2014,given that capital does not abound in Portugal.

In the second-hand market, some opportunities may appearas unemployment levels force some second homes to returnto the market. Even the recently-observed shift of purchases

from the city center to surrounding areas thanks to increasedteleworking, thus not requiring so much daily proximity to net-works of companies and with a better price, which may causeprices to drop in these sub-segments, but not dramatically. In alllikelihood, customers looking for a home in the coming monthswill benefit from the one they bought to resell. And the marketfor rental property will continue to be present, because demandwill certainly increase.

Some segments in the sector may take longer to recover, sincethey depend on tourism, air travel and open borders, such as localaccommodation and hotels. The psychological factor of confidencefor tourists will be decisive for the speed of recovery, and I haveno doubt that, like after 11 September (in terms of the means created for security against explosives and othr dangerous mate -rials), airports, airlines, hotels, restaurants, city transport and manyother sectors of our economy will have to establish appropriateconditions to guarantee health and safety to encourage customersto return.

The general confidence in the country, also a facet of health andsafety issues, will be decisive for the global recovery. Portugal willremain attractive thanks to the climate, prices, food, security, and thefriendliness of the people. And I expect there will continue to be economic incentives after Covid-19 like the ones in place throughthe end of 2019.

Several international and national analysts speak of a phased,U-shaped recovery of the world and national economy, and note itmay take more than a year to returns to the trends seen in the beginning of March this year. But as for the real estate sector, the vast

“THE REAL ESTATE SECTOR IS MUCH BETTER PREPAREDTHAN IT WAS FOR THE PREVIOUS CRISIS TO WITHSTANDA DIFFICULT PERIOD. WE NEED TO BE ALERT TO AND RESIST OPPORTUNISTIC FUNDS THAT ARE ALREADY ON THE MARKET LOOKING FOR FRIGHTENED OWNERSTO BUY FROM ON THE CHEAP”.

José Araújohead of real estate at Millenniumbcp

majority believe the recovery will in a V-shape, that is, this year witha general declin until December followed by a faster recovery during2021. Especially because there are sub-segments that will emergestronger, such as co-living, co-working, offices and smaller buildings,land in areas close to large cities, construction for rent and even localcommerce. In fact, one question that’s still unclear is whether shopping centers will be able to reinvent themselves, given thatlarge crowds aren’t advisable until there is a reliable vaccine that protects all of us from this deadly virus.

All told, the real estate sector is much better prepared than it wasfor the previous crisis to withstand a difficult period. We need to bealert to and resist opportunistic funds that are already on the marketlooking for frightened owners to buy from on the cheap.

According to some large international houses, in a recovery timecurve, real estate will be at the upper midpoint of the main economicsectors affected by the virus, so we must be attentive, but confident.

At Millennium bcp, we are well prepared to continue in the market supporting our customers and assets in the sector, returningto the market as quickly as possible and at the right price, with thesale of properties the bank took on in the previous crisis as a resultof the financial incapacity of their owners.

We have been successful in the past 9 years with the help ofmany partners in the real estate brokerage sector, and the bank'scommercial networks – the entire internal team from various areas,with a commercial team that handles real estate exclusively. And, ofcourse, from investors, clients, developers, international and nationalfunds that have chosen us and acquired our properties with the confidence born of an honest and lasting relationship.


Essential Marketing

Everything is Going Digital! There isno question that the new pandemic

(COVID-19) is a major disruption for allof us. Luxury brands produces free handsanitiser for hospitals; artists are playinglive concerts on Instagram to com bat iso-lation; Audi or McDonalds “separates”their logotype elements to promote safephysical distancing; universities haveturned entirely to e-learning in a few days;technological communities like Tech4 -Covid19 (+5000 volunteers) are develop-ing disruptive concepts like 3D-printedventilators, mobile apps to track infectedpeople, virtual triage assistants and manyother projects in the fight against theCovid-19 virus. So, what brand reinven-tion are we seeing today?

Portuguese consumers continue tofeel the economic effects of the crisis,and their concerns about health, safety,and the economy are increasing. Theyexpect to cut their spending across almost all activities, and home entertain-ment is the only category with positiveonline shopping intent. A majority ofconsumers believe that the personal andfinancial impact of Covid-19 will lastwell beyond four months.

According to the McKinsey Survey2020, Portuguese consumers expect toincrease their online shopping for food,household supplies and at home enter-

tainment. As most people might expect,Portuguese consumers have picked upon the new digital activities since thestart of Covid-19. Procter & Gamble(P&G), Galp, Prozis or Science4you aregreat examples of brands that imple-mented effective digital marketing stra -tegies, reinvented their core activitiesand have offered more human inte -raction during this trying time. So, arePortuguese organisations ready to runtheir businesses online?

“Digital Experience Economy” and“Shop-streaming” are the new normal.The brands that do this best will undoubtedly rebound most quickly.

According to the Digital 2020 report, de-veloped by We are Social and Hootsuite,the Internet penetration in Portugalstood at 83%, while social media usershave passed the 7.00 million mark in2020 (69% of penetration). Even thoughPortugal is close to the European averagein terms of digital competences, it needsto reinforce the strategic mindset, com-mitment and investment. This applies tothe entire human workforce, includingall decision makers that need to under-stand the tasks that have to be done.

Business leaders will need to stay ontop of market trends, embrace the data-driven mindset, while understandingthat new consumer behaviours will bethe key to moving forward. Now, eventoilet paper is being purchased online! AsPortugal pushes through this challengingtime, brands should be the support fortheir stakeholders and society. Makingsure that organisations take a compro-mise approach will lead to winning long-term consumer trust and loyalty.Let’s think digitally. Let’s keep findingsolutions faster than the virus can spreadand mutate. Let’s keep fighting this together. Be safe. Be strong. Be Digital!

Filipe Monteiro is a Senior Digital Marketing Executive, Assistant Professor of Marketing at the Polytechnic Institute of Setúbal, and a contributingopinion writer. �

Covid-19: The new digitalmarketing landscape

In the post Covid world, the digital experience economy and shop-streaming will become the new normal for retail brands says marketeer Filipe Monteiro

“EVEN THOUGH PORTUGAL IS CLOSE TO THE EUROPEAN

AVERAGE IN TERMS OFDIGITAL COMPETENCES,IT NEEDS TO REINFORCEITS STRATEGIC MINDSET,

COMMITMENT AND INVESTMENT IN THIS AREA.”


Essential Opinion


Since CoVID-19 was declared a pandemic and given its conta-gion we now know that this is not just any pandemic. It is a once ina 100 years pandemic. Strict isolation policies were implemented incountries worldwide, from China to Europe. Societies are incrediblychallenged; not only because the global virus is spreading quickly,but also because we’ve lost some of the things that we took forgranted and have had to adapt both personally, and for many alsoprofessionally.

The global economic landscape is not looking good. Several reports about the pandemic’s impact on countries and companies,and estimates and predictions for the short and mid-term make depressing reading. only one thing is certain: a lot of people losttheir jobs and a lot of companies closed doors.

But not everything is bad news! A lot of business verticals haveaccelerated their technological innovation strategies, so they cancope with the new reality, such as telemedicine and remote work,while others have been implementing exceptional measures tokeep their business as normal as possible. Despite this, there is another very hot topic that has been discussed during this crisis:data privacy regulations and the impact they can have during anextreme situation.

Can we restore data privacy after the crisis?

In light for the current situation, opinions and measuresaround data acquisitions and data privacy are disparate betweendifferent countries and different cultures all around the globe:

• As Hong Kong rushed to deal with the initial impact of COVID-19in the region, a set of measures to track individuals’ movements were setin place. On the other hand, on mainland China, the methods used forsurveillance were even more intrusive — an app that not only tracks individuals movements, but also registers any close contacts, as well asnames and IDs. South Korea followed a similar tactic in order to slow thespread of COVID-19 contamination, adopting a mobile-based GPS tracking system that is mandatory for anyone arriving in the country. Interestingly enough, South Korea has also a strong and transparentdata sharing policy, ensuring daily updates on infected individualsthrough the Korea Center for Disease Control & Prevention.

• The Israeli government authorised mass data collection regardingthe cell towers to which citizens' mobile phones are connected, to trackthose identified as carriers of the new virus. The objective is to warn thosewho have been close to an infected person for more than 10 minutes.

• In European countries the scenario has so far been different. Although there are huge concerns around the disease and how to controlthe transmission chains, no country has yet rolled out any technology totrack its citizens. In fact, concerns around data privacy have been raised,with several entities stating that the methods adopted by Asian countrieswould not be appropriate for Europe. Instead, another method has beensuggested, a non-privacy invasive tracking method - Pan-European Privacy-Preserving Proximity Tracing. In recent weeks, several equivalent

"DURING THIS CRISIS MANY GOVERNMENTS AND EVEN PEOPLE AREWILLING TO OVERLOOK DATA PRIVACY IMPLICATIONS IF IT MEANS SAVING LIVES.HOW LONG WILL THIS DATA PERSIST? HOW WILL IT BE USED AND BY WHOM, AND HOW CAN WE RESTORE DATA PRIVACY AFTER THIS CRISIS?"

Fabiana ClementeChief data officer at Ydata

There is no doubt that Covid-19 will accelerate innovationand change in the data economy with implications for dataprotection. Are we prepared as a society to sacrifice someelements of data protection and freedom of informationfollowing the crisis.

control methods have been evaluated, with special focus on “analysingif their implementation is feasible in a European context aligned to ourfundamental rules and values” said Daragh O’Brien, head of data governance consultancy Castlebridge, in statements to Euronews. Datahas also been shared with a wider community, essentially on the geographic evolution of the disease among the infected.

During the crisis, many governments and even people arewilling to overlook privacy implications if that means that lives willbe saved. For instance, in countries like Germany, a large numberof people demanded a national curfew when faced with thereality that others were not respecting government guidelines forsocial distancing.

In the UK, the self-reporting app for Covid-19 saw 650k down-loads in only in a matter of 24 hours. The objective of this app is totrack the development of symptoms among the population, to pro-vide more details about the development of the illness to be sharedwith medical research centres.

However, there is sensitive data that is being collected within thescope of CoVID-19 that might not be exclusively gathered for publichealth organisations and government use. An example of these concerns is the Corona 100m app whereby users can see not onlythe date when a coronavirus patient was infected, but also other private information such as gender, age, credit card information andsurveillance camera footage.

Under ordinary conditions, sensitive patient data cannot beshared and should always be kept private. Making this data easilyavailable, specially to private entities, even for public health interests,can raise concerns as this data has a very high commercial value.

But there are other questions around the data that is currentlybeing collected under the pandemics umbrella. - How long will thisdata be accessible, how will it be used and by whom? Will this datahave a future use for other cases different from CoVID-19? And,above all, how can we restore data privacy after this crisis?

The benefits of an open data sharing economy have been widelydiscussed in recent years, as more and more data-driven markets require data access as a resource to develop new products and services and as data availability increases with millions of usersaround the world sharing their personal information.

The ability to collect and share private data has now been shownto be very important in moving faster towards a global solution, especially in light of a global crisis. However, will we be able to simultaneously leverage a worldwide data sharing economy, whileusing the latest AI techniques but still safeguarding data ethics andprivacy legislation?

This pandemic has raised many questions for governments andindustry sectors, providing an opportunity to reexamine their posi-tions on data protection and privacy.

The decisions taken during this period regarding the use of private data might result in two very different outcomes: in some regions, the risk of having made exceptions might well, in the longterm, lead to the adoption of even more restrictive population surveillance mechanisms. Hong Kong is one of those regions, as thenew rules set in place during the crisis might well be here to stay,becoming difficult to change or even remove.

In others, a need will be seen to adopt new Privacy EnhancingTechnologies (PETs) that will allow for faster, more efficient and securer ways to share information in a truly privacy-preserving manner. PETs include methods such as homomorphic encryption,federated learning, or even synthetic data. If properly implemented,PETs will help industries and governments to leverage third-partydata without putting users’ privacy at risk or leaking confidential business information.

Since it was founded 15 years ago,the International Club of Portugal

has played host to most of the great andgood in Portugal’s political, diplomatic,economic, cultural and sporting society.From ex-presidents of the republic andcurrent prime ministers and members ofthe government, to media personalities,sporting celebrities, filmmakers, high-ranking military figures and ambassadorsfrom many nations around the world.

The club regularly organises lunchevents with guest speakers of renown forgroups of anywhere between 100 and300 members and guests. But what wasthe club’s genesis and what of the manbehind the ICPT?

“I have always had a very deep passionfor associativism, for all those organisa-tions that bring people together, parti -cularly people from different political,religious, financial, cultural, and profes-sional circles. People from a broad rangeof nationalities and the widest areas ofknowledge,” says Manuel Ramalho.

The ICPT president says he has heldthis passion from an early age, when heattended primary school and organisedevents such as picnics and discussionswith his school fellows involving eventhe teachers and parents of these schoolfriends.

In fact, he says it wouldn’t be an exaggeration that he did so to such an extent that he was a “born group orga -niser” as though it was in his DNA.

Essential Associations


Happily, Manuel Ramalho has re-tained many friends from his childhoodwith whom he still mixes and talks aboutwhat he calls his ‘vocation’ when theymeet up.

Manuel Ramalho organised events,particularly in the groups which theywere in, but he noticed that there was“something which sometimes arousedconflicts of interest among us, becausewe didn’t know each other well enough,”he says.

“I formed a deep conviction that theoverwhelming number of situations thatseparate people, countries and institu-tions occur because of a lack of commu-nication between parties. When wecommunicate, obviously we can identifymany different points of view, but also alot of things that unite us” he explains.

The ICPT president says that unfor-tunately a tendency exists to maximiseideas that separate people rather thanthose they have in common.

On the other hand, he believes wehave to learn to live with a diversity ofopinions and points of view, while nevercreating reasons for not getting on wellwith one another.

Later on, despite his busy profes-sional life as a property dealer, ManuelRamalho found time to be involved inthe foundation of several associationsboth in Portugal and overseas, an exam-ple being the respected ANJE - NationalAssociation of Young Entrepreneurs, in

which he was a member of its first gov-erning body.

Today, Manuel Ramalho is a memberof many business, cultural clubs andchambers of commerce, including theAmerican Club of Lisbon and the Ame -rican Chamber of Commerce in Portugal(AmCham), the Academia do Bacalhaude Lisboa and the Grémio Literário.

THE INTERNATIONAL CLUB

OF PORTUGAL

Manuel Ramalho says he foundedthe International Club of Portugal(ICPT) because there had not existed inPortugal, not even in a centre famous forits associations and clubs like London, aclub or association geared towards cul-tural and international diversity.

Up until then, there had been asso-ciations and institutions which focusedon a particular professional group forlawyers, economists or nationalities suchas the Angola or American clubs.

“I even noticed this in London be-cause I visited many clubs where themembers had interests in a specific area.There didn’t seem to be a club celebrat-ing diversity in that great world capital ofassociativism” he remarks.

“I thought there needed to be a clubwhere people with different interests, expertise and knowledge and of differ-ent nationalities, with different cultu -ral backgrounds and financial realitieswould feel at home,” he explains.

The International Club of Portugal

promoting diversityThe International Club of Portugal is more than a networking club for business leaders. It is the place where investors, the media and diplomats gauge the business mood of the

country and look for changes in Government policy direction. Essential Business talks to its president and government, property investor Manuel Ramalho.

TExT AND PHoToS CHRIS GRAEME



“And if members of such a clubcould mutually become wealthier bysharing with each other their awarenessand knowledge, if it didn’t exist, whichaccording to the research I did at thetime, it didn’t anywhere in the world, letalone Portugal, then one needed to becreated” says the ICPT president.

In short, there is today no club that isso all-embracing as the InternationalClub of Portugal, that is frequented bysports personalities, opera singers, foot-ball managers, economists, politicians ofevery shade of political opinion, bullfight-ers, bankers, great business leaders, am-bassadors and people of all nationalities.

AN INTERNATIONAL AGENDA

The international Club, havingachieved much over the past 15 years, isconstantly on the national and some-times international agenda.

But the ICPT president admits thatit has so far only achieved around 10%of what he wants it to achieve. “There’sstill so much to do” he says, and onesuch objective is to attract speakers fromoverseas. “We will start to have speakersof other nationalities”.

So far, it has enjoyed internationalafter lunch speakers, but these havetended to be ambassadors such as thosefrom the US, China, Israel, Italy, Angola,and in the near future the ambassadorsof the United Kingdom and Israel, butalso past speakers such as the CEO ofEuronews, Michael Peters and EU MPCharles Tannock.

Manuel Ramalho recalls the unpre -cedented occasion when the ambassadorof Cuba and members from the Cubanembassy were sat on the same table asguests from the US embassy in Lisbonat a time when the two countries had yetto begin a dialogue towards improving bi-lateral relations.

Another occasion highlighted was alunch at which people linked to the Angolan government were sat on thesame table as those with the NationalUnion for the Total Independence of Angola (UNITA) - both representingparties which had been, in the not toodistant past, involved in a bloody civilwar that had torn the country apart - andwhich had never occurred before.

And the ICPT president reassuresthat the club is making contacts with



other great speakers in different areaswho have nothing to do with the diplo-matic corps.

“This requires a lot of logistics andresources, particularly financial, becauseit implies international travel and accom-modation but we are working on this,”says Manuel Ramalho.

PROTOCOLS WITH INSTITUTIONS

One area in which the InternationalClub has been involved in is the settingup of reciprocal protocols with institu-tions in different countries so that theclub’s members who tend to travel exten-sively, can attend other clubs in London,New York and São Paulo and enjoy thesame access to benefits of membershipthat they currently have at the ICPT.

“This means that when the membersof these overseas clubs and institutioncome to Portugal, they will be able to attend our events” says Manuel Ramalho.

Next year the International Clubalso plans to have premises where clubmembers can lunch, have access to abar and from which they can set upsmall meetings.

BALANCING THE BOOKS

Careful management of expenditure,balancing the receipts that members payto attend an event is not always easy.Manuel Ramalho admits that these revenues are sometimes less than thosewhich the club has to pay the hotelwhere most of its events are held - theDouble Tree by Hilton Lisbon.

Then, there are other necessary ex-penses, the sound technicians, musi-cians, photographers, the administrativestaff.

“Fortunately we have a high numberof members, including corporate mem-bers which pay their membership feesand the help us to meet our running expenses and overheads” says the ICPTpresident.

The ICPT is also lucky to have im-portant sponsors such as the securityfirm Grupo8 Segurança, the real estatedeveloper AM48, Carclasse, the mul -tivalence Grupo Bel, Leaseplan andDuartare.

“Six sponsors is the limit from mypoint of view. We actually would have tothink carefully about accepting moresponsors, otherwise we wouldn’t be ableto give them the adequate care and attention warranted for the investmentsupport they give us” says Manuel Ramalho, adding that the club also has14 media partners including many ofPortugal’s main national newspapers andseveral sector and lifestyle magazines.

SUPPORTING CHARITIES

Manuel Ramalho stresses that the International Club of Portugal and itsmembers have always organised or sup-ported different charitable causes and social solidarity organisations over theyears, with up to €10,000 awarded toeach from donations from the club, andthe president makes a point of saying thatit has never applied for state subsidies.

Manuel Ramalho imparts a messageto other associations and clubs of whichhe is familiar with most of them. “In Portugal there still remains, among someleaders of such associations and clubs, acertain distrust of the competition”.

“It is important that associativismdoesn’t descend into a kind of footballgame mentality where one has to winand the other lose. All associations andclubs which have a genuine interest incontributing to and strengthening civilso ciety should celebrate this culture ofassociativism” he says.

“We should have good relations witheach other, and the more events we holdwhere we instil these habits in Portu -guese society, the better” the presidentof the International Club of Portugalconcludes. �

“IN PORTUGAL THERE STILL REMAINS, AMONG SOME LEADERS OF SUCH ASSOCIATIONS AND CLUBS, A CERTAIN DISTRUST OF THE COMPETITION. IT IS IMPORTANT THAT ASSOCIATIVISM DOESN’T DESCEND INTO A KIND OF

FOOTBALL GAME MENTALITY WHERE ONE HAS TO WIN AND THE OTHER LOSE”

“I FELT THERE NEEDED TO BE A CLUB WHERE

PEOPLE WITH DIFFERENTINTERESTS, EXPERTISEAND KNOWLEDGE AND OFDIFFERENT NATIONALITIES,WITH DIFFERENT CULTURAL

BACKGROUNDS AND FINANCIAL REALITIESWOULD FEEL AT HOME.”


Essential History

Coins are a tangible record of com-mercial history. Unlike manu-

scripts they don’t rot and generallysurvive for centuries beneath fields,building and excavation sites, in ship-wrecks and collections highly prized bynumismatists.

But they can also tell us somethingabout commercial trading pattens, andthe places they are unearthed pose intriguing questions for historians andarchaeologist alike as to why they werefound in a particular place, what was soimportant about that place, and whowere the people using them and why?

Numismatist Tiago Gil Curado stu -died the commercial contacts betweenEngland and Portugal in the Medievaland post-Medieval periods through thecoin record found in many places inEngland and the UK.

Portuguese coins were hoarded, lostor discarded at a time which was oftenturbulent in English history with theHundred Years War between France andEngland in the first half of the 15th cen-tury and the subsequent Wars of theRoses or ‘Cousins Wars’ which followedthem as a result from 1460 to 1485, end-ing with the death of Richard III at theBattle of Bosworth Field.

Tiago Gil Curado did a degree in archaeology at Lisbon University and anMA at Durham and did his thesis and researched all the Portuguese coinsfound in the UK looking at how, whenand why they ended up there.

As part of his Master degree, TiagoCurado spent time in the United King-dom and recorded 291 coins dating between the 13th and 18th centurieswhich had been recovered from archa -

Essential History


eological digs, shipwrecks and metal detecting forays.

He says that it was during theMedie val period that Portugal and Eng-land started a closer relationship and thiscan partly be seen from a significant increase in trade after the Treaty ofWindsor in 1387 which was cementedby the marriage of the daughter of Johnof Gaunt (Gaunt was a son of Edward IIIof England) Philippa of Lancaster toKing John I of Portugal.

Formal commercial relations, how-ever, go back further. In 1353 a commer-cial treaty was signed with England toprotect Portugal’s trade rather than stim-ulate it after Portuguese vessels had been

mistakenly attacked by the English atthe Battle of Les-Espagnols-sur-Mer andwhich had thereby created a huge riskfor Portuguese ships trading in England,Normandy, Flanders and Zeeland. Portu-gal-English trade really took off, how-ever, from the 1370s and 1380s onwards.

Tiago Curado says that from the dis-tribution of coins the most popular portof call for Portuguese ships was Bristol,followed by the South-West of England(Cornwall and Dorset), then London,the Isle of White and Sussex.

At that time, there were two types ofPortuguese coins which were legal ten-der in England. One was the Chinfrãominted under King Afonso V (1438-1481). The Chinfrão circulated at thesame value as a half Groat (two silverpennies).

“Seventy-seven coins came from 18hoards hidden in isolated places. In allof these hoards Portuguese were mixedwith English currency and sometimesother foreign coins showing that theywere as valuable as the local ones.

“There were all types of denomina-tions in copper, billon (alloy), silver andgold. I also registered six coins from threedifferent shipwrecks: one off the coast ofCornwall sunk in 1526, another wreckedin the Bristol Channel in 1583, and athird in the mid-17th century,” he says.

Tiago Curado’s research took him toexcavations, journals and regional pro-ceedings, scouring information from over400 books. “Evidently the number ofPortuguese coins found in this group issmaller than the casual finds, never -theless there are 17 well-documentedfinds associated with archaeologicalsites,” he says.

Unearthing Portugal’scommercial past in EnglandPortugal and England have the oldest unbroken alliance in the world having existed since1373 when the Treaty of Windsor was signed. On the back of the alliance, trade between

the two North Atlantic seafaring nations flourished and a surprising number of Portuguese coins have been discovered that backs up its importance.

TExT CHRIS GRAEME

DID YOU KNOW: • The english word ‘palaver’ meaning a big fuss or commotion comes from the portuguese word‘palavra’ learnt by english merchants buying portuguese goods and African slaves from noisy portuguese merchants negotiating in the ports of Bristol and liverpool.

• when infamous King richard III was looking for a new wife after the death of his Queen Anne neville,he negotiated for the hand of portuguese princess Joana daughter of King Afonso v of portugal andplanned to marry off elizabeth of York (‘The white princess) to the future King Manuel of portugal. Itnever came off. richard was slain by henry Tudor at the Battle of Bosworth in 1485 and married elizabeth of York himself, uniting the houses of York and lancaster.

• richard III’s brother george duke of Clarence allegedly elected to be executed by drowning in a butt(barrel or vat) of Madeira malvasia wine or ‘malmsey’ as punishment for conspiring against his otherbrother who was, at the time, King edward Iv.

One coin was found on the site ofthe old Bartholomew’s Hospital, Bristoland could have been a keepsake belong-ing to a Portuguese mariner who lived atthe hospital from 1445 onwards. Fourothers came from abbeys and priories.

“This could be the result of donationsfrom Portuguese travellers in the formsof indulgences, blessings or alms in return for monks offering prayers of pro-tection or to give thanks for safe passage.The other 12 coins came from cities andvillages,” he said.

In the 15th century, the number ofPortuguese ships and traders in Englandbecame irregular, possibly because of the100 Years War and the Wars of the Rosesthat followed. This does not mean thatAnglo-Portuguese trade was less fre-quent, rather that Portuguese merchantshad opted to concentrate their businessoperations in Flanders while English andItalian traders shipped commoditiesfrom Portugal to England.

This percentage dropped to 3% inthe fifteenth century. Yet Portuguesecommodities, especially wine, continuedto reach British ports like Bristol. Withthe end of the Hundred Years War, winefrom Gascony had become extremely expensive for English traders, so Portu -guese wine was one of the cheaper alter-natives that English merchants found,and the number of Bristolians sellingEnglish commodities in Lisbon grew significantly.

“We know that during that period,since more people could have access toluxury goods they were buying and importing them more than ever. Art,clothes, the finest technology at thattime were being bought to Portugal notonly from England but also France andItaly for example. The same happened inother countries where people were buy-ing those Asian, African and Americangoods that the Portuguese were trading.Evidence comes not only from oldchronicles, but also by the distributionof the objects found which are today inmuseums and also from items found atarchaeological sites” says Tiago Curado.

JOES FROM BRAZIL

There are also finds which reflect thegold Portuguese coins in the 18th cen-tury that were legal tender internation-ally called ‘Joes’ minted in the reigns ofkings Joseph I and John V.

During the 18th century a continu-ing trade surplus with Portugal in herfavour was funded by Brazilian gold andPortuguese gold coins were permitted tocirculate in the United Kingdom. Therewere two series: the Moeda d’ Ouro(Moidore) worth 27 shillings, the halfMoidore (13 Shillings, six pence) struckin Bahia, Brazil, and the quarter Moidore(6 Shillings, nine pence); and the secondseries, the ‘Peça’ or ‘Joe’ (from the namesand portraits of John V (1706-1750) andJoseph I (1750-1777) worth 36 shillings,this series running from 72 Shillings(£3,12s) down to 4s 6d. The coins them-selves are found occasionally in Englandand Wales and weights made for check-ing them survive in large numbers.

Later, during the Napoleonic Warswhen French troops invaded Portugaland the Portuguese royal family fledto Brazil, the British led the military defence of Portugal. “This was a veryprofitable agreement for the British thatsyphoned much of the Brazilian goldto London.”

For centuries, in many of the portsaround Europe there was a register ofthe goods imported and exported by sea.The aim of these registers was to notonly control trade, but also for customs

to ensure merchants paid their taxes.Today, there are not many surviving portcustoms books that have survived andPortuguese records were destroyed inthe Great Lisbon Earthquake, howeverit is still possible to find in the UnitedKingdom some of these books that managed to escape fires, humidity, warsand robberies.

“Through them we can read a fewreferences to Portuguese vessels andtheir cargo which is very useful when itcomes to tracking what was coming fromPortugal to England. It’s also importantto remember that the register systemback then was not systematic, so it’smore likely that not all the vessels andcargo were registered in these books.However, although not 100% reliable,they are some of the best sources of information we have” says Tiago Curado.

And from the goods exported fromPortugal, among the items frequentlymentioned are figs and raisins, but alsoolive oil, skins, honey, dry cloth, and also,after the Portuguese expansion, someimports from the ‘new worlds’ like porce-lain and spices from the East. Exportsfrom England to Portugal include English cloth, bed-hangings, hose, lead,tin, corn, lances and wainscots. �

nUMISMATIST TIAgo gIl CUrAdo


Essential Tourism

Two pernicious obstacles to over-seas investment in Angola are

being removed. One of them, to beexact, has already gone. It was the legalrequirement for any relevant overseas investors to have an Angolan partner.The law was the source of the worstkinds of disputes and abuses. In practiceit meant that the overseas investor ranthe risk of seeing their part of a business

Essential Tourism


in Angola seized by the Angolan partnerand was unable to recover the moneythat had been invested, let alone theprofits. It was a depressing backdropwhich only enabled large multinationalswith sufficient financial clout to makeinvestments or encouraged opaqueagreements between Angolans and foreigners which normally sailed close tothe wind in terms of the law.

The new Private Investment Law(Law Nº10/18 of 26 June) no longer hadthe mandatory requirement of an An-golan partner or companies with Angolancapital. Therefore, investors no longerrun the risk that the partner at a certaindate will snatch the company or run offwith the proceeds.

At the same time the Governmenthas sent out clear signals that it intends

Fresh tourism investmentopportunities in AngolaAngola, once a byword for family corruption, is cleaning its act up and diversifying

its economy with beach and wildlife tourism in the government’s sights, says international research entity CEDESA. (The Centre for the Study

of Economic and Social Development of Angola) TExT CHRIS GRAEME

to clamp down on corruption, a plaguewhich ruined the country for decadesand put off any serious investor. Theseintentions have gone from paper to effective legal measures against noto -rious figures from the past regime, thelast president, his children, ministersand generals. Prison custody, the seizureof goods and the beginning of legal pro-ceedings have all been decreed. Tangibleefforts, therefore, are being made toclamp down on corruption. Efforts thatare being recognised by the InternationalMonetary Fund (IMF) which in its lastreport dated December 2019 noted:“The Angolan authorities continue to beresolved to improving governance, fight-ing corruption and creating a suitable climate for business. Anti-corruption efforts have been stepped up. High upbureaucrats and government figures arebeing investigated and charged, includ-ing an ex-minister and his associates.The police investigators involved in theanti-corruption drives are cooperatingwith experienced overseas investigators.”

Consequently, at a general level thelegal framework in Angola has changedconsiderably, with developments towardsa positive outlook for overseas invest-ment which is becoming safer and lessrisky.

And as it becomes a country of lessrisk and greater appeal, some of its struc-tural characteristics are in fact con-ducive to investment since it is a marketwith a huge possibility for expansionwith a population of just over 30 millioninhabitants and good social cohesion.Angola also has political stability, with nodisruption since 2002 and a constitu-tional regime holding elections since2010. It also has a privileged geo-strate-gic position which gives the investor access to the regional market SADC(Southern African Development Com-munity) of 16 countries with a totalGDP of around US$ 700Bn and around340 million consumers (data from2017).

POTENTIAL AND DRAWBACKS IN

ANGOLAN TOURISM

There is no developed tourism indus-try in Angola. Those few parts that are developed have been so to take advantageof the country’s natural beauty, rivers, waterfalls and the 1,650km Atlantic

coastline. As the official brochures des -cribe: “Its humid tropical climate hascreated an exuberant and lush flora andrich fauna spread out over regions withforest, Savannah, impressive uplands,rivers, beaches that seem to stretch onforever, waterfalls, oases and lovely land-scapes that seem to stretch into infinityand are all pristine and intact. An end-less summer of sultry afternoons bathedin warm breezes to contemplate adven-ture and discovery.

Angola has an extremely naturalbeauty that lends itself as a fantastictourism destination. The Island of Mussolo and the Cape Ledo TourismDevelopment Hub are examples ofplaces with an immense capacity to attract tourists as well as various areas inthe provinces such as Namibe, Benguela,Malanje and Cuanza-Sul. The KalandulaFalls in Malanje are particularly striking.

Angola was almost destroyed duringthe civil war that went on from 1975until 2002 and national reconstructiondid not focus on tourism but on the oilindustry, mining natural resources andcivil construction.

To this was added the bureaucraticprocess to obtain a visa to enter thecountry which still is complicated andtakes a long time which puts off tradi-tional tourism. However, the governmentis working on legislation that whenpassed will make it easier to get a visa.

At present, most overseas travellersarriving in Angola are not tourists,rather businessmen, workers and con-sultants. This means that hotels aregeared towards business and not tourismor leisure.

Tourism, like many sectors in Angola,is seeing a huge potential being wasteddue to past policy errors and presentconstraints.

This is reflected in the markedly lowoccupation rate in hotels which wentfrom 84% in 2014 to 35% in 2017 and25% in 2018. This fall in take-up mirrorsthe crisis in business that has overshad-owed the country rather than a lackof interest in tourism. The fall in oilprices which has occurred since 2014has led to a falloff in economic activityin Angola which has led to less businesstravellers to occupy hotels. However,these depressing numbers do not re -present any structural trend. Between

2009-2014 Angola saw strong growth inthe hotel sector enjoying receipts that exceeded 45Bn kwanzas (100 millioneuros at the exchange rate at the time),creating around 223,000 job posts.Therefore, there is a potential for thetourism business.

FUTURE STRATEGY

Since there is a new and favourableclimate for investment being promotedby the Government with the easing upof the bureaucratic process for issuingtourist visas which is being legislated,the conditions for a new strategy to attract tourists is being developed whichdoes not just focus on business tourismbut leisure tourism linked to the coun-try’s natural beauty. A natural beautywhich extends to all regions in the coun-try. Tourism should be developed whichis not linked to the oil industry but is anindependent sector.

It is therefore expected to be possibleto promote the development of hotelsand tourist seaside resorts aimed at holi -daymakers in some of the areas specifi-cally set aside for sun, sea and sandtourism such as the Tourism Develop-ment Hub at Cabo Ledo 120km fromLuanda in the municipality of Quiçama,which has 2,000 hectares of immensebeauty and is a potential location forworld surfing once the visa processeshave been eased up.

Another alternative aimed at naturetourism is the Calandula Malangetourism hub which has the most impres-sive waterfalls in Angola and is the second largest in Africa at 150 metreshigh and 401 metres wide. A 1,978-hec -tare area of endless greenery and water-falls as far as the eye can see and whichhas a huge tourism investment potential:Tourist accommodation, restaurants, en-tertainment, golf and casinos.

In conclusion, there is a new politicaland legal climate in Angola which callsfor a different tourism investment stra -tegy which is not based on business andinterlinked with oil exploration, but is independent and focused on beach, sea-side and nature tourism which will pro-vide a new area of interest for theoverseas investor and one with the pro -mise of strong returns.

www.cedesa.pt �


Essential Entrepreneurship

Superimpose is fast becoming aninternational case study. It has

ripped up the rule books on how brandsthrough their advertising agencies tellconsumers what they want. Instead, ithas done the unthinkable. It has gone tograss roots levels and asked consumers,particularly the younger generation, whatTHEY expect from their brands.

And in a few short years, Olani -pekun’s London-based agency with itsteam of 45 has scooped the Creative Review’s ‘Agency of the Year’ award andhas a stable of top fashion names underits belt including Adidas, Burberry andthe British Fashion Council.

Superimpose started in London'sShoreditch five years ago, a creative hubfor startups in the UK capital where itwas based until moving to Kings CrossThe agency has also recently opened anoffice in New York’s China Town, whilein Los Angeles it has a production teamand is considering an office there.

With eight core clients and second-ary clients within some of the UK’sand world’s biggest brands, work atthe agency is pretty hectic working onprojects for men’s, women’s and kids’products.

Although Olanipekun loves fashion,the industry, he says, is a “world unto itself” and the agency tends to focus onlifestyle, entertainment and hospitality,including the lucrative drinks market. Although he can’t reveal names, Super-impose is foraying into hotel launch



campaigns with a new proposition afterthe brand involved approached theagency on the merit of its growing success and revolutionary approach.

DEFINITELY NOT DARK SUIT

AND TIE

Ollie had been working in the crea -tive advertising industry for 10 years, butsays he had always wanted to have his“own ideas seen and heard” with the aimof reaching the broadest mass of people.He says that his biggest psychologicalstumbling block was never having founda home. “I was never living with peoplewho looked like me, sounded like me, orshared the same background” he says ofhis early advertising career.

He says, “I felt people just didn’t un-derstand me and weren’t on my wavelength. If you look back at advertisingover the past 10 years, it was very mucha white men in dark suits industry andthat model did very well, but hadn’t yetmoved on” from the kind of stereotypeseen in the TV series Mad Men.

“The advertising business has com-pletely changed, although there is stilla place for everybody. Society hasgone through a huge technologicalshift, there’s online social media and influencers.”

EGO AND ARROGANCE

Ollie adds that as a young person inthe industry he felt there was a discon-nect between the producer, the market

and the consumer. “I suddenly realisedthat the teams I had been working withhad no clue or interest in the consumerat all. It was all about the producer andthe brands” he explains.

“There was no sense of going to meetpotential consumers to discover whatthey actually wanted from a product. Itwas all about the brands arrogantly deciding for them, and convincing themthat their product was what they hadwanted or needed all along, but thatthey somehow just hadn’t realised it”he continues.

The advertising guru says that therewas too much “ego and arrogance in thebusiness” which had gone unchallenged.Ollie says that from TV advertising it isvery hard to see a product’s reach,whereas on social media you can actuallysee how well a campaign is going, fromthe amount of likes and shares.

“For us, as an agency, we are verykeen on helping brands to understandwhat their role is or can be in the con-sumers’ lives. You have to be a service toyour consumers and not the other wayaround. Take Nike, for example. Theirapproach now isn’t just about gettingsomeone super famous and posting themwearing their products on social media.It’s about empowering individuals andcommunities and our role in our con-sumers lives need to be adding value,”he explains.

Ollie says that as a young marketeerhe had imagined that had always been

The advertising outlierOllie Olanipekun, Co-Founder and Creative Director of Superimpose is one of a new breed of advertising entrepreneurs who have revolutionised the mindset of an industry which has traditionally dictated trends to consumers. Now, he says, consumers are

calling the shots and he’s been in Portugal looking for ideas and inspiration.TExT AND PHoToS CHRIS GRAEME



the case and it was shock to discover thatthe consumer generally had “very littlesay in being able to figure out what exactly it wanted from a product”.

“We got very bored and frustratedwith seeing bands and agencies pretend-ing that they cared about the consumer.Now we’re living through an absoluterenaissance in advertising. The questionwas why weren’t agencies in the businessto add value as well as to make money?”

ALL ABOUT EXPERIENCE

People, he says, are now asking whatthe future of hospitality, retail and evenworking is. For example, in China andthe Far East the retail experiences arecompletely different to what it is todayin Western Europe and the USA. Theconsumer wants an experience andadded value.



Ollie says that brands often havehuge spaces and resources and it shouldbe about taking these resources and in-volving the community in arts, sportsand events, although these in themselvesare not enough.

“The current high street shopping experience is one example. In the UKthe model is dead and crippled by over-heads. The role it should play in thecommunity and independent designers’lives needs to shift. We need to com-pletely change the retail model” he sayspointing to revolutionary new conceptssuch as augmented reality and robotics.In other words focusing more on com-munity, technology and service.

This can include customers beingable to virtually customise or designproducts themselves, virtually changethe colours of garments, mobile image

search and recognition to help cus-tomers find what they are looking for,in-house advice from stylists and gene -rally creating a unique shopping experi-ence. But Ollie says that this revolutionextends to every industry.

The marketeer says that the era of retainers with massive €2.3 millionbudgets for the creative agency to just be“on hand” is over. Now brands want tangible proof that their message andproduct is meeting audiences.

“Today, brands want to see theirimage spread across TV, Social media,retail outlets and through guerrilla mar-keting. The agencies of the past werenever proactive. They were always play-ing catchup with the latest technologyand trends and not creatively innovating”he admits.

LEARNING FROM MISTAKES

Ollie’s dream was to come up withthe creative ideas and have them rolledout on all the different channels. Whenthe company launched it made agood start with the fashion and lifestylebrand Adidas.

“We’d done a previous campaign forAdidas, which was very much a design-led project. We had been excited abouthow well the campaign had done. Thecampaign was meant to be in eightglobal cities but ended up being in 18”he recalls.

“Then we got the next brief, whichwas a campaign shoot for the kids range.We did budget, production and then wegot to the shoot and it just fell to pieces.I think what happened is that we suffered from lack of preparation andhad the wrong team members on it”he admits.

Ollie Olanipekun says working withchildren is actually a lot easier than withadults, because “you have a limit of fourhours”. And he says it’s not difficult controlling children because theyare amazingly well-behaved and their parents are always present.

“It’s just that we were overconfident,that’s what it came down to. We justdidn’t give the time to have the right teammembers for the shoot. I was thankful forthat because I realised that you are onlyas good as your team” he says.

DEALING WITH CLIENTS

One of the aspects of the uber-com-petitive advertising industry that is mostdifficult for new marketeers in the indus-try is what Ollie Olanipekun calls “an atmosphere of intimidation”.

“I’ve learnt when going into thesemeetings with potential and new clientsto just relax. Everyone is nervous and alot of clients will make the atmosphereintimidating because they have thatpower to do so, yet I try and relax theroom because, after all, none of us aresaving dolphins. Never be intimidated bywhoever is sitting across from you be-cause they have to live up to someoneelse’s expectations above them as well.You have to remind the client that we’rein this together, and that if they make iteasy for us, we’ll find it easier to makethem look good” he says.

ADVERTISING FOR THE

NEW GENERATION

Ollie Olanipekun says that althoughnew under 30 generation lives in a rest-less and insecure world of constantchange, they are surprisingly confidentand that brands and advertisers needto study their attitudes, ideas, wantsand needs.

“These young people live transientlives, there are no borders for them any-more. In all of the brackets Generation X,Y and Z they are all different. When welook at new consumers we have to do a lotmore work to understand them” he says.

“People’s attitudes, wants and needschange quicker than they ever have before because of technology. The waywe’ve been doing things for decades simply doesn’t work anymore” he adds.

In order to feel the younger genera-tion’s pulse, the agency has been workingwith educational establishments andyouth centres to understand how theseyoungsters think.

“They are anxious about getting jobsin a world dominated by post-ascendingauthority, where influence no longercomes from top down, but rather fromgrass roots up. It used to be said thebrands, institutions and celebrities werethe influencers and their ideas, opinionsand trends trickled down to the rest ofus in society.

“It is the other way around now.Young people are now influencing thecelebrities, but it’s how they harness thatpower and use it successfully that theyare struggling with. They have an air ofconfidence, they want to work for them-selves on their own projects” says the advertising expert.

And that anxiety over jobs and the expected acceleration in technologicaluptake has only excited both these desires and anxieties in a world domi-nated by the Covid-19 pandemic.

“The virus has hit us big time as anagency. One of our luxury fashion clientsis 90% down in China. They are closingstores and laying off staff and Chinamakes up one-third of every luxury pur-chase worldwide. But with a shift awayfrom manufacturing in China I see anopportunity for Portugal and its leatherand textiles industry and perhaps for us.I love this whole vibe here in Lisbon andthe startup scene and its entrepreneurialspirit excites me” he concludes. �

"IT USED TO BE SAID THATBRANDS, INSTITUTIONSAND CELEBRITIES WERETHE INFLUENCERS ANDTHEIR IDEAS, OPINIONSAND TRENDS TRICKLEDDOWN TO THE REST OF USIN SOCIETY. NOW ITS THEOTHER WAY AROUND”.


Essential Energy

British Petroleum (BP), like all oilproducers worldwide, has suf-

fered from effects of the internationaleconomic shutdown caused by the cur-rent Covid-19 pandemic as demand hasfallen across the board from all sectorsat a time when there was already a sur-plus on the market.

This has been greatly aggravated by afalloff in China’s industrial productionlevels and, as a consequence, its oil im-porting requirements, not to mentionthe grounding of airline fleets aroundthe world.

The actual and expected collapse indemand from China and the rest of theworld as the economic impacts of Covid-19 hit home has sent crude prices totheir lowest levels in more than a year.

But to what extent is the collapse inprices circumstantial and structural andwhat will be the recovery rates for aproduct which is still of prime impor-tance for both economies and society?

BP Portugal boss Pedro Oliveira saysthat “There is not a single oil producingcompany in the world with a balancedcash-flow” since the price of crude fellto below US $35 per barrel. All of thesecompanies, without exception, are in difficulties, particularly when they haveto meet their shareholder commitments.Both BP and Shell are responsible for30% of the dividends distributed on theFTSE 100.

Price volatility was the least volatilein the period between 1900 and 1970and until the first oil crisis in the early1970s.

Before the beginning of March 2020the price of crude had been stable at between US$45 and $US65 or “within

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the comfort price zone” known as a ‘fairprice’ for crude. This is a price bandwithin which oil companies can distri -bute promised dividends to sharehol -ders, in which they don’t strangledemand, make enough profit to invest inand explore renewable energy alterna-tives, and can maintain some semblanceof balance in an overall unstable andvolatile panorama.

“If prices go over $US75 demand isstifled and the economy is impacted,and if it falls below US$ 45 the financial viability of these companies is put at serious risk in terms of making enoughmoney to invest and pay out dividendsto shareholders” explains the BP Portu-gal CEO.

“From March demand fell 30%below the expected price, while therewas a lot more offer in the market thandemand warranted. But what is subja-cent to this volatility? We have a rela-tively simple model, but we have neverbeen able to predict or influence theprice, and those factors we thoughtcould condition the price is now nolonger valid” he says.

Investors and traders, he says, whobought long (i.e., on future projected expectations) now find that if they tryto sell the oil they purchased they willface huge losses.

But even before that, the model formarket behaviour and the factors whichconditioned prices which had been rela-tively stable until the late 1990s, had nolonger held true for 20 years, so this phenomena didn’t just happen with thepandemic from March.

In February OPEC producers tried tonegotiate a production cut amid concerns

that Covid-19 could impact demand —which is exactly what transpired fromMarch. Russia walked out on the nego -tiations and Saudi Arabia responded byundercutting oil prices by US$6-8 perbarrel before, on 8 April, Russia andSaudi finally arrived at an agreement toslash oil production by 10%.

But by then it was too late. Priceshad already fallen by up to 60% fromFebruary highs and prices sank to belowzero with May futures for WTI oil closing at -US$37.63 on 20 April. Forthe first time in history producers werewilling to pay traders to take oil offtheir hands.

In the past oil reserves had been re -latively scarce. Over the past 20 years,not so much through exploration butrather improved technology, we have discovered two barrels of petroleum forevery barrel consumed. We have gonefrom talking about peak of production topeak of consumption by 2040.

Automation has taken centre stage inrecent years, which for the oil industrywas a matter of necessity. When oilprices fell 75% over 20 months in 2014,the industry was forced to modernise.

By 2018 prices had recovered, hittingrecord levels in the United States astechnology has reduced operating andmaintenance costs and increased effi-ciency in marketing and distribution.

The second point is that 20 years agoOPEC was responsible for two-thirds ofoil production worldwide. Today it is onlyworth one-third and no longer has thecapacity to influence the price of oil in astructural manner, although it can stillsubstantially act as an arbitrator overthe oil price.

Stuck with a glutThe oil industry has been particularly hard hit by the Covid-19 pandemic as a result of falling demand provoking a record low in international crude prices, huge market volatility and a glut in stocks. The CEO of BP Portugal Pedro Oliveira discusses

‘Oil Price Volatility and its Impact on the Energy Market’ with the British-Portuguese Chamber of Commerce (BPCC)

TExT CHRIS GRAEME

SHALE OIL

Also, the past decade has seen a significant impact from shale oil (10%of world production) particularly in theUnited States. The International EnergyAgency had suggested the US couldwell overtake Saudi Arabia and Russiato become the world’s biggest oil pro-ducer this year and energy self-sufficientby 2030.

However, while US shale oil produc-tion will probably have a positive impacton US domestic oil production and re-duce its level of oil imports, most ana-lysts suggest it will not affect the globaloil supply and in reality the US will neverbe able to become self-sufficient or over-take Saudi and Russia, let alone have thepower to deny OPEC the power to setinternational oil prices.

“Shale oil production, because itsoutput can be activated and deactivatedrelatively easily, unlike conventionalcrude oil extraction, has softened thevolatility curve in times when therehave not been the sharp external shocksthat we are seeing now” says the BPPortugal CEO.

“The oil market is very good at react-ing in terms of operations to an increasein demand, but is not so effective indealing with falls in demand and the veryaggressive falls in price when demandslacks” he adds.

Under normal circumstances, thehigh level of efficiency in the industrymeans output production is exploited tothe maximum. However, the unstableimbalance currently being seen, with anintensity in volatility, the production ofshale oil because its production can beactivated and deactivated relatively easily

“THERE IS NOT A SINGLE OIL PRODUCING COMPANYIN THE WORLD WITH A BALANCED CASH-FLOW SINCETHE PRICE OF CRUDE FELL TO BELOW US $35 PERBARREL”. - PEDRO OLIVEIRA, CEO BP PORTUGAL

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“WE ARE LOOKING AT THISCRISIS AS A COMPANYWITH OVER 100 YEARS OFEXPERIENCE THAT HASSUFFERED LOSSES ANDFACED CRISES BEFORE”.

has softened the curve when there havenot been such sharp external shocks aswe are seeing now.

“These exceptional circumstanceshave ‘only’ led to an aggravation of avolatility that had already been inthe market for some time” says PedroOliveira.

STUCK WITH A GLUT

Oliveira says that before the pan-demic the world consumed around 100million barrels of oil per day, but with thefall in consumption now, which impliesa fall in consumption of 25-30%, “We arecurrently consuming around 70-75 mil-lion barrels per day”.

All those who bought under the po-sitions three or four months ago in thefutures markets, means they are stuckwith 25 million currently unwanted bar-rels of oil which are costing a fortune tosit around in storage, hence the currentdesire to offload it despite making a loss.

The rising stockpiles of crude is nowoverwhelming storage facilities and has

forced producers to actually pay buyersto take the barrels they cannot store —that’s 65 million barrels of oil in storagefor each two days of consumption.

In fact, by the 20 April a record 160million barrels of oil was being stored insupergiant oil tankers outside the world’slargest shipping ports, including the USGulf. The last time floating storagereached levels even close to this was in2009 when traders stored more than 100million barrels at sea until it was able tooffload stocks when the economy beganto recover.

THE EFFECTS ON BP

So where does this leave BP whichas seen its profits plummet 66% as thecoronavirus hit oil demand?

BP says that underlying replacementcost profit, its definition of net income,was US$800M in the first quarter of2020 - down from US$2.4Bn like-for-like in 2019.

However, its chief executive BernardLooney says the company will continue

to pay shareholders a dividend. “Our in-dustry has been hit by supply and de-mand shocks never seen before, but thatis no excuse to turn inward," he said.

But low oil prices can leave BP witha problem. If it wants to fulfil its targetof going green and being carbon neutralby 2050 it needs higher oil prices tomake the investment needed to do so.

“We are trying to protect our finan-cial derivates as far as possible to getthrough this very complicated period, weare looking at this crisis as a companywith over 100 years of experience thathas suffered losses and faced crises be-fore” says Oliveira.

BP is going through the largest reor-ganisation in its history with an ambitionto become a net zero company by 2050or sooner through a five-target planwhich includes a 50% cut in the carbonintensity of products it sells by 2050 andinstallation of methane measurement atall BP’s major oil and gas processing sitesby 2023 and slash methane intensity ofoperations by 50%.

It also aims to increase the propor-tion of investment into oil and non-oiland gas businesses over time.

“This crisis has taught us a series oflessons and we want to accelerate our re-organisation and strategy going forwardbecause in 10 years we want to be a different company”. And he concludesthat yes, the world will continue to needoil for some decades. “When demand begins to pick up, and we are going tocontinue to need oil-driven energy forthe foreseeable future, prices will riseagain aggressively,” he concludes, eventhough analysts say the price of a barrelof oil will remain below US$ 50 for theforeseeable near future. �

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