Novo Banco in capital injection call
Lone Star, the US vulture capital fund which owns Portuguese bank Novo Banco, is close to using up the €3.9Bn capital injection secured from the process of the sale of the bank created from Banco Espírito Santo in 2015.
After a cash injection of almost €2Bn over the last two years, the bank led by António Ramalho is preparing to ask for more cash from the Resolution Fund to cover the losses that have been built up in the process of offloading toxic loans (NPLs) from its balance sheets.
These losses got worse in the last quarter of the year, making a dent in the balance accumulated since the start of 2019.
On Friday the bank’s results showed losses for the first nine months of the year of €390 million bringing the total to-€572 million.
These losses were explained by the legacy of BES which was seated into a specific unit — a bad bank — which saw a loss of €712 million.
According to the bank, in the first nine months of 2019 it suffered losses related to the restructuring and deleveraging process of non-performing loans (NPLs), namely projects Sertorius, Albatros and NATA II and the sale of GNB Vida all of which generated a negative impact of €391 million.
Novo Banco adds that the amount of money it will ask from the Resolution Fund at the end of the year will depend on “losses and costs, recoveries and capital demands at the time of funds application.”
“Today we are certain that we will achieve all the ambitious commitments that were agreed between Portugal and the European Commission and the strategy of clearing the legacy of debts has proved to be the correct one,” states Novo Banco CEO António Ramalho without revealing how much cash the bank will require from the fund.