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Novo Banco “won’t get any more State aid”, says PM

In an announcement that may see multiple account holders considering their options, prime minister António Costa is reported to have “informed the European Commission” that the government is against ploughing any kind of new State aid into Novo Banco. If the bank is not sold by August 2017, it will go into liquidation, reports Lusa news agency.

The message, apparently included in Portugal’s “letter to the EU” regarding the possibility of sanctions, talked of the government’s “profound preoccupation” with the whole process of the (non-existent) sale, set in motion by the Bank of Portugal almost two years ago and still nowhere near any kind of satisfactory completion.

Lusa adds that Costa’s message was intimated in May when it became clear that no sale of the ‘good bank’ that emerged from the collapse of BES was expected to cover the billions ploughed into it by “participants in the Resolution Fund” (namely other Portuguese banks).

The bank that pulled its first sale auction after weeks of chaotic negotiations at the end of last summer posted new record losses of €980.6 million last year – blaming more than half the amount on “the BES legacy”.

Since then, the Bank of Portugal has tried to make it more attractive, by cancelling over €2 billion in senior bonds between Christmas and the New Year, but interest in Novo Banco has remained lukewarm.

natasha.donn@algarveresident.com