Government and presidency fail to agree on timeframe for Novo Banco’s audit

  • ECO News
  • 6 March 2019

The President wants to include the years since BES' resolution, but according to ECO's sources, the audit will only look at credit conceded before the resolution of BES.

Last Friday, Novo Banco presented the results for 2018, showing losses at €1.412bn, and claiming it will, therefore, apply the contingent capital mechanism, asking the state for €1.419bn from the Resolution Fund.

Last year, Novo Banco had already welcomed €792m from the government’s resolution fund, and if the amount requested this year is accepted, then the bank will have used over €1.9bn out of the possible €3.89bn it could get from that mechanism.

When confronted with the issue, the minister of finance, Mário Centeno, together with the Resolution Fund’s administration, requested an audit to Novo Banco, “in order to scrutinize the credit concession processes which are affecting the contingent capital mechanism”. This audit will be very similar to the one ordered to EY to look into Caixa Geral de Depósitos’, which has initiated a lot of debate and a parliamentary hearing.

The audit to Novo Banco will analyze the credit concession in the period when the bank was still known as BES, and was under the leadership of Ricardo Salgado.

Although the President of the country, Marcelo Rebelo de Sousa, completely agrees with the audit being made to that bank, he has a different view from the government on how it should be planned. Namely, the presidency is defending that the audit should also look into the years “after the resolution of BES”, meaning, it should look also at the period from 2014 onwards — the government, however, has defended an audit to the period prior to the resolution.

This Sunday the President noted that “the Portuguese taxpayers have the right to know what has happened to their money since the resolution of BES”.

ECO contacted the Ministry of Finance to get some reactions on the President’s claim for a different timeframe, but that government body noted that the final say will be given by the Resolution Fund itself, which is the body responsible for soliciting the audit.