Prime minister António Costa revealed last night that beleaguered Banif bank has been sold to Spain’s Santander Totta, for the knockdown price of €150 million.
It was the “best option” open to Portugal, he explained, but one that will have catastrophic consequences for the country’s taxpayers, now left to foot a bill of well over €2.2 billion.
Within minutes of his announcement, Costa’s party and every other minority left-wing party in parliament was demanding an inquiry.
The bottom line is there must have been repeated “negligence and irresponsibility” to have got to this point – both on the part of the last government and the governor of the Bank of Portugal, Carlos Costa.
PS parliamentary leader Carlos César was the first to demand a probe, saying: “We know the (former) Finance Minister was repeatedly warned, since as far back as a year ago, particularly by European authorities, over the degradation of the situation and the urgency for intervention. She kept pushing the subject forwards to avoid facing it before the elections”.
César added that the new government will now have to approve an “amended budget” to accommodate Banif’s ‘fallout’, “the size of which would have been avoidable” had Maria Luís Albuquerque “acted competently and responsibly”.
To this end, the council of ministers is holding an emergency meeting this (Monday) morning, while Left Bloc firebrands have repeated their calls for the dismissal of BdP boss Carlos Costa.
In a press conference today, BE’s tough-talking Mariana Mortágua went even further, accusing the leaders of the last government, Pedro Passos Coelho and Paulo Portas, of “a crime against the interests of the State and of the country”.
BANIF RESOLUTION, ALL TOLD, COMES TO €2.9 BILLION
The furore hit the nation’s television screens late last night when António Costa was left with the unenviable task of explaining yet another deal that backfires on the nation’s taxpayers.
As international news agency Reuters wrote: “This is the second time in as many years that Portugal, which only emerged from an international bailout last year, has had to rescue a lender”.
And although Banif is a “much smaller bank” than BES – which required €4.9 billion to bail it out last summer – “the hole to be plugged by the State is significant”, adds the news service, “and the final deal more complex and costly” than initially expected.
To quote the statement from the Bank of Portugal, the deal “guarantees the total protection of families’ savings, and those of companies associated to Banif” and “maintains the normal function of services”.
Clients will able to conduct all their “habitual” bank business – either at the bank’s branches or electronically – and will simply from this morning become the clients of Santander Totta.
“The operation involves public support estimated at €2.255 billion designed to cover future contingencies”, said the BdP, of which €489 million will come from the Resolution Fund and €1.766 directly from the State, as a result of options agreed between Santander Totta, Portuguese and European authorities.
Reuters adds that “all financial institutions working in Portugal have to contribute” to the Resolution Fund, but does not allude to the fact that €1.2 billion was ploughed into Banif by the State three years ago, and has barely been repaid.
Thus the true picture of Banif’s fallout is in excess of the €2.2 billion being bandied about today. PM António Costa conceded when he made his announcement last night that “this sale has a very elevated cost for taxpayers. But among the solutions possible, it is the one that best defends the national interest”.
Coming in a week when the IMF has come clean over the folly of landing Portugal in so much unsustainable debt as a result of the 2011 bailout, the country’s economic prospects as it approaches 2016 could not look less festive.
BUOYANT SANTANDER BECOMES PORTUGAL’S SECOND LARGEST PRIVATE BANK
Meantime, Santander Totta has now become the fourth largest bank in Portugal, and the second largest private banking concern.
A delighted president Ana Botín said in a statement: “The acquisition of Banif Bank is yet another demonstration of Santander’s commitment to Portugal” towards which the Spanish bank will be putting all its capacities for “support towards the progress of people and companies within communities”.
Financial website Bloomberg added that Santander’s layout for Banif would have an “immaterial” impact on the Spanish bank’s capital.
This is largely because all Banif’s toxic and potentially toxic assets that could lead to lawsuits and other difficulties have been left out of the deal for the Portuguese State to deal with.