Portugal to probe CGD, country's largest bank

Portugal has launched a probe into the state-owned Caixa General de Depositos bank, prosecutors said Saturday, with local media reporting that the investigation would centre on allegations of mismanagement and ruinous investments.

The Expresso weekly said the inquiry will focus on leadership at the bank, Portugal's largest by assets, post-2000, including loans issued between 2005 and 2010 during former socialist prime minister Jose Socrates' time in office.

Socrates was arrested in November 2014 and investigated for corruption, money laundering and fraud. He was held in detention for nine months before being transferred to house arrest in October.

Prosecutors probing CGD are assessing "sub-prime loans worth tens or even hundreds of millions of euros... investments in the Brazilian markets and credit facilities for Spanish companies which were revealed to be ruinous", wrote Expresso.

"We confirm the existence of an investigation into the facts around Caixa General de Depositos," Portugal's public prosecutor told AFP without giving further details.

CGD's controversial involvement in a luxury Algarve tourist development in the country's south in 2006 was probed as part of the investigation into Socrates.

In August the European Commission and Portugal announced a 5 billion euro ($5.6 billion) deal to bail out CGD, including a 2.7 billion euro injection of state funds.

Portugal's banks have been under huge stress after the collapse of the country's major lender Banco Espirito Santo in 2014 due to years of risky lending.