Former PM surprised at 2015 failure to sell Novo Banco

  • Lusa
  • 30 April 2021

The former prime minister of the PSD/CDS-PP governments, Pedro Passos Coelho, acknowledged he received the news of the failed sale of Novo Banco in 2015 "with relative surprise."

The former Portuguese prime minister, Pedro Passos Coelho, acknowledged he received the news of the failed sale of Novo Banco in 2015 “with relative surprise,” as he had noted the former governor of Bank of Portugal (BoP) Carlos Costa “quite optimistic”.

The former prime minister of the PSD/CDS-PP governments between 2011 and 2015 gave written answers to questions posed by the Socialists within the Parliamentary Commission of Inquiry into the losses recorded by Novo Banco and imputed to the Resolution Fund, a written statement Lusa saw today.

“As for the frustration of the sale process, it was known to me either through the former finance minister or later by the former governor [of Bank of Portugal, Carlos Costa]. However, I received the information with relative surprise, as I had always noted the former governor was quite optimistic about the prospects for the sale of the bank,” he said.

According to Passos Coelho, “it was specifically the Bank of Portugal, as the Resolution Entity, which was responsible for the resolution decision, as well as the process of selling Novo Banco which was created by the resolution.

“This did not prevent the government from seeking to monitor developments in the situation and cooperate with the Banco de of Portugal at its request,” he added.

Passos Coelho also referred to the hearing of his finance minister, Maria Luís Albuquerque, in this same commission of enquiry to state that she “gave great detail” in monitoring what was done at the time by the ministry of finance and “the exchanges that were maintained, both with the supervisor and with the management of the bank”.

“In any case, it was evident to me that there was every advantage in ensuring an expeditious process of selling Novo Banco,” he added.

According to the former prime minister, a transition bank does not have an “owner” that offers strategic stability, so there is a “tendency to see its assets deteriorate more quickly in the market.”

“And it will be more vulnerable to market fluctuations since the bank resolution rules make it difficult, and in certain circumstances would even prevent, new capital reinforcement procedures to be provided by the Resolution Fund, which is the same as saying, by the other Portuguese banks,” he pointed out.