Novo Banco in Resolution Fund cash call

Novo Banco is to ask for more money this year from the Resolution Fund.

In an interview with the newspaper Jornal de Negócios/radio Antena 1, its president António Ramalho said the bank would need more capital this year than “had been anticipated at the start of the year and before the Covid-19 epidemic”.
The banker, who actually earns around €382,000 per year and NOT €400,000 per month as has been widely reported in the national press, remained tight-lipped as to the amount the bank would be seeking from the fund but said, “I have always been cautious not to mention a specific figure. What’s happened is that basically there has been a deterioration in the economic situation and it is predictable that given the scenario we face today, that we will need some supplementary capital in addition to what there is”.
“We have a capital cushion of 12%, contract protection, but we will have to wait until the end of the year to know the (required) amount,” he said in the interview.
“Our goal is clear, to leave the bank totally clear (of inherited debts from the collapse of Banco Espírito Santo in 2015) by the end of 2020. I would like to use the least capital necessary providing that I am sure that the bank is in the best condition,” António Ramalho added.
The bank, which is part-owned by the Portuguese State and part-owned by the US vulture fund Lone Star is expected to be sold when the bank’s toxic balances are finally cleared. Its Spanish arm is already up for sale with both Abanca and Andbank showing an interest.
Novo Banco has around €912 million left in the Contingent Capital Mechanism for the recapitalisation of the institution and Ramalho said he aimed to clear the banks balance this year and return to profit next year.
When quizzed about the bank’s additional social security contribution required of the banking sector under the terms of the Supplementary State Budget 2020, António Ramalho called the surcharge an “unnecessary wear and tear” for the bank and the sector.
According to the data provided in the interview, Novo Banco has already granted €6Bn in default and approved €1.2Bn in State-guaranteed loans to support companies through Covid-19.