Novo Banco and its crippling losses continue to weigh on the Portuguese economy. But for the sake of a budget that doesn’t funnel more state aid Novo Banco’s way, the government has come up with the ruse that national banks will pay the next instalment.
Explain reports, ‘it’ll all come out in the wash’ as the loan will still hammer the Portuguese deficit – and the nightmare isn’t going away.
There is another €400 million which can (and almost certainly will) be ‘requested’ under the terms of the ‘catastrophic deal’ signed with US equity company Lone Star in 2017 (click here).
Thus, to recap, for the ‘face saving’ of the government the next multi-million tranche of cash will be loaned by a group of commercial banks to the Resolution Fund which, under the terms of the deal with Lone Star, can be called upon to finance Novo Banco to the tune of just under €4 billion by 2026.
Says Expresso, the banks are believed to be CGD (the State bank), BCP, BPI and Santander.
In financial terms, this is the equivalent of ‘smoke and mirrors’ to ‘satisfy’ left-wingers in parliament who have said they will not countenance any more State money going into Novo Banco.
Whether it does satisfy them however is what no-one can tell.
Says Expresso, there has to be more parliamentary discussion on budget and its various measures. A general vote comes on October 28, and if approved, the budget goes on to be debated in ‘specialities’, returning for a final global vote on November 26.
In other words, there’s still a long way to go.