Portuguese Government mimics an Austrian model to sell Novo Banco
Portugal is amid negotiations with creditors who lost 2.2 billion in NB in 2015. The solution Austria implemented in its bad bank Heta is a model for the agreement which could unblock NB's sale.
The Portuguese Government wants to reach an agreement with creditors who, in December 2015, lost a large part of their investment in Novo Banco when the Bank of Portugal decided to transfer five series of notes totaling 2.2 billion euros to the insolvent estate of Banco Espírito Santo. Officially, no one is commenting on this information, but ECO knows the negotiations for a settlement will accelerate over the next couple of days.
After months of deadlock and meetings with no apparent results between the Government and international funds, the need to reach a new agreement between international funds for the sale of Novo Banco made this decision more urgent. Mário Centeno, Finance minister, had already suggested this business initiative to news agency Reuters, and according to ECO, the Government wants a solution which resembles the one Austria implemented in October 2016, in their agreement with the creditors from the bank Heta.
Officially, no one is commenting on these more recent negotiations. It is a sensitive subject and, at the end of the day, the goal is to reach a balanced agreement which pleases creditors and the State, namely taxpayers, who will bear the costs. Those costs are anywhere between 2.2 billion and 600 million euros; the latter corresponds to the amount those creditors from BES are legally entitled to, had there been a liquidation, instead of the bank’s resolution. This amount was brought forward by Deloitte and it corresponds to Novo Banco‘s liabilities towards creditors for having lost 2,200 million euros with the transfer of bonds to the bad bank (BES).
