D-day today for Novo Banco sale

For better or worse, the Bank of Portugal has to decide by midnight tonight on negotiations it has been having over the sale of Novo Banco.

Always intended to be sold to the highest bidder, “best offer” so far from Chinese insurance group Anbang is still fraught with uncertainties.

Not only has Anbang offered less than BdP wanted to clear the €4.9 billion hole in the Resolution Fund, there are fears that the European Central Bank will accept a Chinese company taking over what is effectively the third largest Portuguese bank.

As negociosonline explains: “The fact that China is a country governed by an authoritarian regime is at the root of these fears”.

And then there is the whole issue of China’s financial crisis and the fact that Anbang did not emerge unscathed from Black Monday.

Thus eyes are all on the BdP today, with prime minister Passos Coelho already saying the government has implicit faith that governor Carlos Costa will forge the best deal possible.

Media sources are saying Costa has “political margin” to close the deal “with high losses” to the Resolution Fund. What is important, is that the deal is either closed, or negotiations move on to the next best solution – a sale to American group Apollo.

For now, the “high losses” on the table suggest the Resolution Fund, made up from money from 80 Portuguese banks and financial societies, could be €1.4 billion short.

Anbang has offered €3.5 million for the bank that morphed from the BES disaster, when €4.9 billion was the total poured into it, under BdP’s auspices, from the Resolution Fund.

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