Novo Banco’s “creditors-left-in-the-cold” try new tactic to get money back

A group of large investment funds has today launched a new offensive in its campaign to claw back some of the €2.2 billion “dumped” by the Bank of Portugal in a supremely controversial move between Christmas and New Year two years ago (click here).

The Novo Note Group has created a punchy Twitter identity exposing what it believes to have been daylight robbery.

Says the group’s second tweet: “In December 2015, Banco de Portugal unlawfully retransferred €2.2 bn of bonds from Novo Banco to the ‘bad bank’ Banco Espírito Santo, imposing significant losses for investors”.

“Banco de Portugal’s decision broke … the key legal principle of equal treatment of senior creditors, and discriminated against international investors. Portugal’s credibility as an investment destination has been damaged (from) going forwards”, says tweet number 3.

And this is the thrust of today’s broadside: the group made up of over 20 financial institutions claims the country stands to lose up to €200 million a year simply because large investors no longer trust it.

At a juncture when Portugal “needs to pay back a €10 billion loan to the European Central Bank” and “find substitutes for the ECB now that its stimulus programme is coming to an end”, this could make the coming months another embarrassing financial scramble.

Novo Note’s bottom line is: “Banco de Portugal must take action to address the unlawful Novo Banco retransfer and rehabilitate Portugal’s reputation with the investment community.

“Only then will some of the world’s largest investors be able to continue their long history of supporting Portugal”.

The group co-ordinated by Attestor Capital, BlackRock, CQS and PIMCO has created a bank of key documents regarding the December 2015 Retransfer decision and the sale process of Novo Banco to American Lone Star Funds (click here).

Its damaging tactics come at a time when the government is going all out in multiple directions to attract international investment.

The last ‘acid drop’ of media stories emerging today is that “Portuguese banks will also have to pay the price of the Bank of Portugal’s decision”.

Says Dinheiro Vivo: As a result of ECB recommendations that credit has to be 100% provisioned, banks will have to reduce their bad debts by issuing “around €9 billion in new debt”.

Novo Note warns: “Just Novo Banco could need around €5 billion”.

It is a nightmare that Bloco de Esquerda MPs have been talking about for months, but one that up until now the ‘powers that be’ have been seemingly trying to ignore.

[email protected]