Chinese set to take-over Novo Banco and put Portugal on whole new investment level

With the Chinese tipped to “scoop” Novo Banco from other bidders in the race, national media is today predicting that the deal will put Portugal on a whole new level when it comes to Chinese investment.

If either Anbang Insurance or Fosun International become Novo Banco’s new owners, Portugal will be on a par with the UK as China’s No1 market place, writes the Macauhub website.

Meantime, the government and the Bank of Portugal are said to be close to a solution that would imply the “minimum” number of branch closures and job losses.

Money, in the end, is the most important factor in this deal, stresses the website, using quotes from Nuno Amado, the head of Millennium – currently Portugal’s largest private bank.

“All that is important is that the buyer is an entity that the authorities believe in. If it is Chinese, great, as long as it pays well (…) the objective is to maximise the price,” he explained.

Indeed, it is this objective that has seen other contenders fall by the wayside. BPI – led by Fernando Ulrich – pulled out last month, suggesting not only that Portugal had become an “aircraft carrier” for Chinese moving in on Europe, but that the deal threatened to “lead analysts to value Portuguese banks at three times what they are worth”.

But as the deal has to be seen to secure the €4.9 billion that Portugal’s banks and Resolution Fund ploughed into it, few are asking profound questions.

Sol newspaper simply reports that it will give Chinese investors 15% of Portugal’s banking sector, on top of the 30% stake China has in insurance and the 45% holding it has through China Three Gorges in EDP.

Novo Banco’s purchase “could be” the biggest deal this far involving Chinese in Portugal, adds Macauhub, as even China’s EDP purchase only involved €2.69 billion. Novo Banco’s stands to be in the region of €4 billion minimum.

Meantime, the website introduces the faces behind the looming mega-bucks.

One of them is Guo Guangchang. Described as a member of the Chinese Communist Party’s executive council, he is one of the country’s biggest businessmen with huge foreign investments, extending even to the glittering Cirque du Soleil.

Another is Wu Xiaohui, of Anbang Insurance, who bought the emblematic Waldorf Astoria hotel in 2014 – while other names are already well-known here: Lu Chun of China Three Gorges and Liu Zhenya of China State Grid – already a principal stakeholder in REN.

Discussing the looming deal with Sol, analyst Albino Oliveira said Chinese investment in Portugal shows “confidence in the Portuguese economy”, as well as “a strong availability of liquidity”.

But at no point in the story was any mention made of the continued pressure from many quarters for Novo Banco to honour millions of euros of BES ‘debts’ that were conveniently left behind in the good-bank/bad-bank carve up.

Among these debts are those suffered by hundreds of small investors – many of them now retired Portuguese whose lives have been ruined.

Carrying the plight of these investors this week, Público estimates there are over 33,000 who have invested an average of €15,000 each, bringing the total now claimed at over €500 million.

As national media has reported, even bank regulator CMVM believes Novo Banco should honour these investors’ claims, but the latter maintains there is no legal obligation for it to do so.

Last week, in a move that many felt added insult to injury, Novo Banco declared it would resort to legal action to stop ‘damaged investors’ from mounting weekly protests outside its branches.

The threat has not been taken seriously, and protestors were back at the weekend, demonstrating outside the Bank of Portugal in Lisbon and demanding a meeting with bank governor Carlos Costa.

By NATASHA DONN [email protected]

Photo: BES investors who lost their savings in the bank’s collapse have vowed to continue protesting until Novo Banco honours their claims