“Disastrous” sale of Banif bank hides €79 million in court actions

As the dust settles on what has been variously described as the “disastrous” and “catastrophic” sale of Banif Bank to Spain’s Santander Totta, news sources have been reporting on the hidden millions in court actions that have been left behind in the “bad bank”.

At latest count, no less than €79 million in “judicial processes” are stacked up against Banif – all likely to be paid by the beleaguered Portuguese taxpayer.

Days before Prime Minister António Costa made his announcement over Banif’s knockdown sale for just €150 million, the Montepio bank group lodged a court action in Lisbon for €20.3 million. This joins 56 other legal cases, including one for €53 million from Novo Banco.

But this is only the tip of the Banif iceberg. In final analysis, Portugal’s latest bank debacle is expected to cost taxpayers upwards of €3 billion – €800,000 more than originally suggested by the Bank of Portugal.

It is a situation that saw Banif’s former president Jorge Tomé calling for “judicial investigation” as he spoke to television cameras on Christmas Eve and which the day before had seen almost every minority party in government calling for a parliamentary inquiry.

Prime Minister António Costa’s declaration that the sale was “the best option” open to Portugal has not left anyone feeling the least bit satisfied.

The bottom line is that 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”.

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”.

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”.

But it has seen shareholders losing all their money – in the case of the family members of Banif’s founder Horácio Roque, losses have been estimated at around €45 million.

And the “disastrous” form of the sale was highlighted by Tomé who told reporters before Christmas, and continues to affirm that “it need not have happened this way”.

Tomé said he had no inkling that the bank would be disbanded. What was on the table, he thought, was a sale of the government’s 60.5% share in the bank. What happened was a “lightning operation” with no negotiation on any of the six purchase bids submitted.

Tomé has warned that along with the billions to be paid by taxpayers, hundreds of staff redundancies will follow.

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