Four billion euro BES bailout comes up for repayment with “no solution in sight”

Exactly two years since the BES bombshell battered the already beleaguered Portuguese economy, the government is reportedly “trying to find a solution” to the fact that it is payback time for the lion’s share of the €4.9 billion bailout used to paper over the fracas. And, not surprisingly, there is no spare cash in sight.

According to Público, one of the instant answers may be to move the goalposts – and shunt payback time forwards by another 12 months.

But it still won’t help with the main problem, which is not so much when the State can payback its Resolution Fund, but how.

As Público explains, prime minister António Costa has already guaranteed that whatever decision is made, it will not involve yet more taxpayers’ money.

Crucial to the whole issue is the sale of Novo Banco – the ‘good bank’ set up with the bailout money which has so far failed catastrophically to woo any prospective buyers.

Bankers “should not count on any kind of discount on the part of taxpayers” if Novo Banco fails to sell for the €4.9 billion that was ploughed into it, Costa told a conference on the past, present and future of the banking sector last week.
Público adds that “everything indicates” that Novo Banco will indeed sell for a great deal less than €4.9 billion.

In fact, the State’s total exposure to Novo Banco extends to €7.4 billion, the paper adds (well down the page of its latest story).

Even more alarming is the fact that the government is currently faced with what Público dubs “various financial dossiers in an extreme situation”.

Beyond the issue of Novo Banco, there is a €4 billion ‘hole’ that requires plugging at Caixa Geral de Depósitos, recapitalisation issues with BCP, an ongoing shareholding problem with BPI and “costs relating to interest payments, charges levied by financial consultants (€15.8 million) and former secretary of state Sérgio Monteiro who Público claims wants €304,000 for his so-far unsuccessful efforts to sell Novo Banco.

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Photo: Prime minister António Costa outside a Novo Banco bank during his electoral campaign in September last year