Consortium offers Portugal €15 billion to clean up toxic banks

A consortium led by a Portuguese high-flyer is ready to present the Bank of Portugal with a cheque for €15 billion. The plan is for the bank regulator to use the money to “clear up” non-performing loans.

As Público explains, the solution could “facilitate the sale of Novo Banco” (as it would free it up from current restaints) as well as put banks struggling with bad loans back onto a manageable footing.

The massive cheque could “even allow the State to recuperate part of what it is going to invest in CGD” – the national bank that has so many underperforming loans that its directors have consistently refused to list them.

For now, the offer is simply informal. Coming through former Goldman Sachs ‘golden boy’ António Esteves, it was apparently made two months ago, writes Público, and BdP is still mulling it over.

Esteves meantime has explained the plan: “We think we can resolve the problem of non-performing loans that is weighing on the balances of Portuguese banks without giving any kind of income and making structure heavy and difficult to manage”.

There is little clear information of who is behind Esteves. Público describes the consortium as ‘international’ and supported by a “large investment bank”.

Considering Esteves was one of Goldman Sachs’ youngest partners – leaving after a glittering career only last April – it could well be that the north American institution is the ‘large investment bank’. Only time will tell.

But what is certain is that the issue is “critical for the stability of the financial system” and tomorrow (Thursday) Eurogroup moneymen will be back in Lisbon to “evaluate” whether Portugal is really in a position to repay international creditors (see cover story in tomorrow’s paper edition).

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