From €4.9 billion to zero: “Novo Banco could be ‘sold’ for nothing”

Any hope that news of interest in buying up €15 billion of Portuguese bank debt (click here) could calm fears of visiting Eurogroup ministers may have been kicked into the long grass this morning by a story suggesting Novo Banco could end up being sold for nothing.

Sábado broke the news, which has now been religiously repeated by almost every other national media source.

The nuts and bolts of it are that the good bank that saw €4.9 billion ploughed into its creation in 2014 and which the last government wanted to sell as “quickly as possible”, has just got too much toxic baggage to attract any serious bidders.

Those that remain ‘in the field’ are demanding “guarantees” that the State doesn’t want to give (as they could be cripplingly expensive). Thus, the way ahead, says Sábado could be to waive the price tag altogether.

Considering the initial asking price was €4.9 billion, this is some climb down – but it is not ‘the end of the road’.

Sábado adds there are still other possibilities under consideration: one is to delay the sale even further, to August this year (by which time the bank has to be sold, under the terms of the initial loan from the Resolution Fund); another is to try and “limit the guarantees” and maintain some sort of price tag.

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