A communique released today (Friday 13th) sounds a suitably ominous ring to the Lone Star deal that has finally received Brussels’ approval:
“Only as far as necessities arise for capital in serious adverse circumstances that cannot be resolved by Lone Star or other operators in the market, would Portugal make additional limited capital available”.
This means, say reports, that the State “could inject more than the €3.89 billion foreseen by the Resolution Fund”.
It’s the ‘inconvenient truth’ hanging over this controversial sale.
Dinheiro Vivo spelt it out earlier this week in a headline: “Taxpayers could be called on again to finance Novo Banco”.
As DV remarked on Wednesday, Brussels has not revealed what it means by “serious adverse conditions”, nor has it set out any kind of roadmap as to how the bank would move forwards should they come about.
Brussels only real interest is in “guaranteeing long term viability” at Novo Banco, says the site.
With fingers tightly crossed – particular among the so-called good bank’s already whittled-down workforce – the conditions of Lone Star’s “ambitious” restructuring plan will become clear “over the next two weeks”.
It is certain to involve “the exit of staff and close of branches”, while directors have already agreed to limit salaries to ten times the average take-home pay of staff members.
Nonetheless, given Lone Star’s recent withdrawal from grandiose plans for Vilamoura (click here), pundits are concerned.
“Novo Banco, while loss-making, could be revived”, said one “But the continued involvement of taxpayers is of huge political concern, hence few people are talking about it.
“The main issue is that 75% of a bank is being handed over to a vulture fund that can’t even make a go of Vilamoura…”
Finance Minister Mário Centeno’s office considers the “European Commission’s decision closes yet another important round in stabilising the financial system and energising the Portuguese economy”.
Now, all that is needed is for Lone Star to inject €750 million into the ‘good bank’ and conclude its 75% purchase.
The remaining 23% stays with the Portuguese State which, DV recalls, “has no rights to vote in any of the institution’s decisions”.