Portuguese minister of Finance: Novo Banco’s settlement is “out of the question”

  • ECO News
  • 16 January 2017

Mário Centeno is focused on selling Novo Banco, but that doesn’t keep him from considering nationalization, since the ministry cannot be held “hostage of solutions”. Settlement is out of the question.

Mário Centeno said selling would be the ideal solution for Novo Banco. However, if its sale is not possible, the minister of Finance does not exclude other alternatives such as nationalizing the bank. The settlement of the bank carved out of the collapsed Banco Espírito Santo (BES) is considered by the minister to be “out of the question”.

“I maintain my expectation for the sale; that is what we aim for the reintroduction of Novo Banco in the Portuguese financial sphere”, states Mário Centeno during an interview to Reuters. The minister of Finance mentions that selling is the best option for the bank but, if it does not happen, he does not exclude other alternatives, saying: “We [the ministry of Finance] cannot be held hostage of the solutions found and we will explore them, being that right now, we are focused on the sale process”.

Mário Centeno had already stated in an interview to the Portuguese newspaper Diário de Notícias and radiostation TSF, in which he said “nothing is off the table when it comes to assuring the financial system’s stability”, adding he does not want to “eliminate any type of approach for Novo Banco”.

"In that sense, no door can remain closed because, in order to be able to combine criteria and goals – which sometimes appear to contradict each other–, we must broaden our possible operations.”

Mario Centeno

Minister of Finance

But among all the possibilities – sale, nationalization and settlement –, the minister completely excludes extinguishment from all options; Mário Centeno considers it to be “basically out of the question”.

However, any solution must always have the seal of approval from national and European authorities. “It is clear any solution for Novo Banco must be discussed with European authorities (supervision and competition), but also with Portuguese authorities; this is how the Portuguese government has been acting in all issues related to the financial sector”, the minister explains to Reuters.

The government is racing against time to sell Novo Banco. They have until August to conclude the process; otherwise they must broaden their options either to nationalization or extinguishment. Politically, there is an increase in the number of supporters of nationalizing the bank, from both right and left parties. Nonetheless, the final say belongs to António Costa, Portuguese PM.