The European commissioner for Competition says the government never presented plans to nationalize Novo Banco - a solution, she says, would go "against the commitments made on the resolution of BES".
The European commissioner for Competition was clear on the matter: António Costa’s Executive never requested Novo Banco‘s nationalization to Brussels. Margrethe Vestager also explains the European authorities merely approved the partial sale of the transition bank because Portugal agreed to give up “control of the bank” to the buyer and maintain a “purely economical” stake.
In an opinion article published in the Portuguese newspaper Público, the European commissioner for Competition states that when a bank is having difficulties, it is up to the government to decide whether or not they will grant state aids and how that aid would be given. Nonetheless, among all possible solutions, nationalization was never on the table for the Portuguese Executive.
Vestager explains: “When contacting the Commission, Portugal never presented any plans to permanently nationalize Novo Banco — that would directly contradict the initial commitments concerning the resolution of BES aiming to ensure fair competition and the return to the bank’s viability in the hands of a private entity”. She also adds: “Our role is to make sure all measures proposed by national authorities are compliant with the EU law, including state aid rules”.
The Portuguese Ministry of Finance explained that nationalizing Novo Banco would “disrespect the agreement the Portuguese Republic made with European institutions”; therefore, they chose to make the sale to the North-American fund Lone Star. Vestager clarifies: “Now, after negotiating with the buyer, Portugal will maintain a 25% stake on Novo Banco. The Commission accepted this alteration because Portugal will hand in the control of the bank to the buyer and maintain a merely economical stake which will allow the country to benefit from possible future profits“.
The European commissioner for Competition believes it is now important to make sure that Novo Banco is “viable in the long term, without having to resort to more public aid”. Brussels now awaits the final restructuring plan the Portuguese authorities and the Resolution Fund will present.