Novo Banco: Over 95% of the losses originated from BES

The CEO of Novo Banco, António Ramalho, said on Wednesday that 95% of the losses referred to in the Deloitte audit were due to assets prior to 2014, i.e., that belonged to BES and passed to Novo Banco in the resolution.

The bank reveals that 95% of the losses recorded between August 2014 (when the Novo Banco emerged) and December 2019 came from assets it inherited from BES. “There is not a single new credit or a new name that has been constituted after the resolution,” Ramalho stressed in a press conference.

Ramalho later repeated that there is “no new operation” after these losses. “There are restructuring operations in progress and we are still waiting to see if they were successful or not,” he said.

Two days after the Deloitte special audit was delivered, the president of Novo Banco came forward to explain the asset sales that have been questioned in recent months. António Ramalho said that the bank had been the target of “unprecedented criticism” regarding these operations. However, after a long silence for “ethical issues”, he says that “a cycle of clarification has begun.”

Deloitte’s audit of BES/Novo Banco management acts refers to the period between 2000 and 2018 (i.e. covering both the period before and after the BES resolution and creation of Novo Banco), has been ongoing since last year and should have been completed in July, but was only delivered on Tuesday to the government.

According to the government, the report reveals net losses of 4.042 billion euros at Novo Banco (between 4 August 2014, one day after BES’ resolution, and 31 December 2018) and “describes a number of serious shortcomings and deficiencies” in BES’ lending and investment in financial assets and real estate until 2014.

Created from the BES resolution (on 3 August 2014), 75% of Novo Banco was sold in October 2017 to the US investment fund Lone Star, with the Bank Resolution Fund keeping 25%, in a solution agreed between the Bank of Portugal and the government.