Novo Banco, the ‘good bank’ created out of BES toxicity has failed to fly, or even hobble.
Out of the blue, at the end of business on Friday, the bank presented ‘its accounts for the period January to September 2019, and the numbers were awful’, writes Diário de Notícias.
“Consolidated results have worsened in a substantial way”, says the paper – outlining ‘an accumulated loss of 572.3 million to the end of September. That’s 46% more than losses for the same period last year.
The government ‘had expected to inject 600 million euros into the bank (via the Resolution Fund) in 2020, due to the losses the bank reported this year, DN adds – but “in the end Novo Banco’s financial situation is worse than it seemed. Again”.
The European Commission “estimates that the State will be called to inject 653 million euros, minimum, next year because of failings to balance capital ratios. (Finance minister) Mário Centeno forecast 600 million”, the paper explains.
Grupo Novo Banco hasn’t specified exactly how much money it will request from the Resolution Fund – which DN stresses ‘is the property of Portuguese banks but doesn’t have the resources necessary to keep injecting this level of funds, so has to borrow from the State’.
The country will have to wait for the results of the last three months of 2019 before Novo Banco formulates its ‘request’.
As was explained when the bank was ‘sold’ to US equity fund Lone Star in 2017, Portuguese taxpayers are tied to helping recapitalise the bank to the tune of a maximum of 3.89 billion euros (click here).
The figure was always touted as ‘the worst case scenario’. But fast-forwarding to 2019 shows the financial situation “just continues to worsen”, says DN.
“Just to have an idea, since 2014 – the year of BES’ implosion – to September this year, Group Novo Banco has presented cumulative losses in the order of 6.55 billion euros”.
Whatever happens in the future, says the paper, “the negative consequences for the public purse are already substantial”.
Needless to say this is ‘one side of the argument’. A source for Novo Banco has said the information given by DN is “not true and passes onto readers an error”.
The bank seeks to stipulate that there “exists an agreement reached at the end of 2017 between the Portuguese State and the European Union that is being rigorously complied with.
“Thus as there exists no deviation from the initial plan agreed, there can be no drop in expectations”.