Novo Banco

Mismanagement at Novo Banco? “We’d expect our money back”, says PM

Yesterday’s bi-monthly parliamentary debate hit the headlines over the possibility that ‘poor management’ at Novo Banco – the ‘good bank’ bailed out by taxpayers following the collapse of BES – could ultimately, be paid for… by the bank.

It’s the first time this scenario has been publicly-mooted – and has seen the bank’s hierarchy hit back that it’s superemly fed-up at the way it is regularly “used as a political weapon”.

The subject of Novo Banco, and the latest tranche of money ploughed into it under the terms of the much-derided 2017 recapitalisation/ sale ‘deal’ (click here) – has been on a slow rumble for weeks, since the prime minister suggested an audit was underway that would determine whether the money was paid out at all.

Mr Costa then discovered that, without his knowledge, his finance minister ‘the Ronaldo of Europe’s financial group’ had paid it anyway.

There then followed all kinds of shenanigans – particularly calls for Centeno’s resignation – but as many upsets do under Mr Costa’s watch, things were quickly brought under control.

Focus now is on when (not really whether) Centeno will be leaving the government to take over the Bank of Portugal.

As pundits explain, the central bank could hardly have been run worse for the last decade. Any change, particularly when it comes in the form of a financial ‘star’ like Mário Centeno, has to be welcomed.

Critics however believe there should be a ‘grace period’ before former government ministers move on to new, extremely responsible positions that should have no connection with politics.

Bearing in mind the context of a pandemic causing economic meltdown, this is all very probably just noise.

Reports today say “the opposition tried their hardest to establish the future of Mário Centeno within the government”, but the prime minister wasn’t taking the bait.

He did however respond to questions about the billions ploughed into Novo Banco – using the money of everyday taxpayers – guaranteeing that if mismanagement of the bank is found, it will be required to repay some of the money it has received from the Resolution Fund (which has been bank-rolled by the State).

Again, this was probably just ‘noise’, but it has infuriated Novo Banco which hit back with a statement this morning saying all the political posturing is simply “prejudicing” the bank’s activity”, and undermining its efforts at recovery.

Novo Banco “daily serves hundreds of thousands of clients” and is a mainstay of the economy “particularly in this hour of difficulty for Portuguese businesses and families”, said the statement.

Says Observador, the bank habitually comes under the media spotlight when the time for new ‘payments’ under the recapitalisation agreement comes round. This year scrutiny was “amplified by the economic cost of the pandemic”. Even President Marcelo referred to the bank’s recent tranche at one point, wondering if it would agree to its suspension to help the national effort of prevention (click here).

It hasn’t helped that the bank is planning to hand out €2 million in bonuses to its directors and has increased the already inflated salaries of its top brass.