Novo Banco

Novo Banco hit by new bargain-basement sale scandal

Novo Banco is back in the headlines this week with further allegations that it has been offloading assets at bargain-basement prices, and getting the Portuguese State to cover the ‘losses’.

The latest scandal centres on the sale of a life insurance company with a discount of almost 70%, generating losses of 268.2 million euros which had to be offset from Portugal’s Resolution Fund.

As is constantly explained by the media, the Resolution Fund is broke, thus it has to be lent funds by the State.

Público is running this latest story – just as it trail-blazed the previous one centring on the knockdown sale of 13,000 properties to an anonymous fund of investors in the Cayman Islands which (also) appears to have had no money.

The paper explained last month that Novo Banco lent the investors the money they needed to purchase the ‘bargain-basement’ assets and then requested ‘compensation’ for the considerable ‘losses’ from the Resolution Fund.

Novo Banco’s top brass has reacted angrily today to what it calls Público’s continued ‘campaign’ against the bank, threatening the paper with legal action.

But as TV commentator José Gomes Ferreira has said, “this is not the way to go about it”. These sales have to be probed, and explained – as they are wrong, and frankly scandalous.

Mr Gomes Ferreira told SIC television news that Novo Banco was technically ‘forced’ to sell its assets under deadlines defined by Europe. This is where things started to go wrong, he said. The bank should have had the strength to “tell Europe that they wanted to wait”. It should not have complied with orders that instantly devalued the worth of its assets.

This latest controversy has been further muddied by the fact that the buyer of GNB Vida (now renamed Gama Life) is closely connected to American insurance magnate Greg Lindberg, recently condemned in the U.S. for corruption and tax fraud.

According to reports, Mr Lindberg could be facing up to 20 years in jail.

Probing the terms of the sale, Público reports that a complaint was filed in January this year asking ESMA, the European regulator, to “investigate the contours of the alienation of the Portuguese life insurance company” admitting “possible collusion” between the executive president of GNB Vida and the management of Novo Banco “with the aim of harming Portuguese taxpayers”.

It’s no wonder these insinuations have so irked Novo Banco’s administration. But as both Mr Gomes Ferreira and President of the Republic Marcelo Rebelo de Sousa insist, things need to be properly explained.

An independent audit of Novo Banco by Deloitte’s was ‘promised’ by end July. It still hasn’t transpired. Said Marcelo today, it needs to be speeded up as it involves (for this reads: it affects) “all the Portuguese people” whose taxes, in the end, fund the Portuguese State.

NB. To date the State has ‘funded’ Novo Banco with almost all the 3.9 billion euros outlined under the terms of the ‘ruinous’ sale to US equity company Lone Star in 2017.

Talking to SIC this afternoon, José Gomes Ferreira said that the chances of the State having to end up nationalising the bank even so in 2021 are becoming “more and more probable”.

And he added that the scandals haven’t stopped with GNB Vida. “There are more” assets that will have been sold off at ridiculously low prices, generating more demands for compensation.

natasha.donn@algarveresident.com