Restructuring Novo Banco will result in 400 dismissals

  • ECO News
  • 31 March 2017

Portuguese PM António Costa stated this Tuesday that Novo Banco's sale should be concluded this week. The Government gathered with parties and revealed the details of the restructuring plan.

According to the Portuguese prime minister, the acquisition of Novo Banco should be concluded this week. The details of the negotiations with Lone Star were revealed to the Portuguese political parties this Tuesday: according to the radio station Rádio Renascença, the restructuring plan implied in the sale will result in 400 dismissals. In addition, Novo Banco will have to close 55 branches. According to the parties who spoke on the radio, the business will be a heavy burden for taxpayers, both through the direct and indirect participation through the Resolution Fund — financed by Portugal.

Nonetheless, negotiations are still ongoing. As ECO disclosed, there is an agreement with Brussels to allow the Resolution Fund to take part in the sale of the toxic assets — the so called ‘side bank’. Moreover, DGComp allowed the Resolution Fund to have, in addition to 25% equity, a guarantee on those troubled assets. The issue was ill-received by the banking sector, fearing it will increase Novo Banco‘s risk exposure.

According to Renascença, Sérgio Monteiro, the Bank of Portugal representative in charge of NB‘s sale process, was present in the meetings, as well as Maria Luís Albuquerque, representing the Social Democratic Party (PSD). The Government stated there will be no capital injection in Novo Banco this year.