“Close to zero euros” – the price of Portugal’s Novo Banco, ‘created’ with €4.9 billion

Just as was suggested late last month, Novo Banco is to be ‘sold’ to US fund Lone Star for a ‘symbolic price’ pretty much set at “close to zero euros”, writes national tabloid Correio da Manhã today.

The €4.9 billion that went into its creation from the toxic ashes of BES are going to be massaged somehow into the future “in a way that will not penalise accounts”.

And Lone Star is to inject a billion euros into the bargain-basement bank “to reinforce financial solidity”.

The deal effectively frees the government from the fallout of “problematic loans” – of which there is expected to be plenty.

It also leaves the State with a 25 – 30% share in the capital of the bank – a “solution” says CM to which the government is not opposed, and which will somehow ‘dilute’ Lone Star’s risk exposure.

But what does it really mean for the Resolution Fund of national banks which ploughed millions into the bank with a view to getting the investment back?

CGD, BCP and BPI will all suffer “elevated losses”, explains CM – with the former set to suffer to the tune of well over €1.6 billion.

This threatens the country’s taxpayers (“as the bank is public”), says the paper, hence the plan to make these losses up by 2046, a date sufficiently far into the future to calm the nerves of all those currently at the helm.

The way this “solution can be applied is now being negotiated with the EU’s competitions authority”, adds CM – making no allusion to a ‘last minute’ offer, allegedly involving up to €4 billion in hard cash, by an unknown consortium of investors who were unwilling to reveal their identities (click here), nor to two other US funds that came forwards this week: Cerberus and Kildare.

Meantime, criticism of Bank of Portugal governor Carlos Costa – for almost every decision he has made since the catastrophic fall of BES in 2014 – is said to be deepening, with PS powermakers making it crystal clear that they think his performance has, at best, been lackluster.

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