The 792 million euros' injection in Novo Banco will be concluded in the next couple of days, Ricardo Mourinho Félix assures. The injection is a reinforcement, after the bank's record losses in 2017.
Novo Banco ended 2017 with the worst results of its brief lifespan, accounting for losses of 1.4 billion euros. This record number lead the institution to activate the capital contingent mechanism worth 792 million. The injection will be concluded in the next couple of days, the Portuguese secretary of State Assistant and of Finance, Ricardo Mourinho Félix, stated, in a conference about the Portuguese banking, in Lisbon.
“The injection in Novo Banco will be concluded in the next couple of days”, Mourinho Félix said. This statement follows the decision made by the State, the Bank of Portugal and the Resolution Fund to reassess the financial institution’s accounts, ascertaining the real financing needs of the bank headed by António Ramalho.
That assessment lead the Resolution Fund to make a 791.7 million euros’ injection to Novo Banco to make up for the impairments which surpassed two billion euros registered in the end of last year and elevated the bank’s capital ratio to 12.8%.
That injection was made within the capital contingent mechanism, created when the bank was sold to the North American fund Lone Star as a guarantee to protect a set of assets from Novo Banco. This mechanism is managed by the Resolution Fund and could be activated again, if Novo Banco continues to register losses as large as these — which should happen again next year, although in a smaller amount.
Some banks have been reluctant about this injection, namely Santander Totta. António Vieira Monteiro states he is concerned about the numbers that are presented for Novo Banco. However, he says Novo Banco deserves “the benefit of the doubt”.