President weighs in over Novo Banco property row

 In Banks, News

The Portuguese President has opined over the continuing controversial sagas involving Novo Banco – this time over the alleged sale of bank properties at bargain basement prices.

After a series of articles charting the fall of Banco Espírito Santo and the formation of Novo Banco from its ashes in 2014 and the continuing revelations that have appeared in the Portuguese media over the past two years, Marcelo Rebelo de Sousa says that the “Portuguese have a right to know” about the bank’s alleged decision to sell off properties on he cheap, a bank which has been bailed out by both public money and cash from Portugal’s other banks through a resolution fund since 2015.
So far, Novo Banco may well cost various institutions — public and private — nearly €10Bn to clear up toxic assets and NPLs (Non-Performing Loans) in order to make it solvent enough for Lone Star, a US vulture fund which injected €1Bn into the bank in 2017, to sell off as a going concern to another banking group.
Both Bankinter and Millennium bcp have in recent days rejected any notion that they might be interested in snapping up the bank.
But while an endless stream of unsavoury stories continues to circulate in the Portuguese media, it seems unlikely ANY private bank will want it, leaving nationalisation as the only probable option on the table for the government.
That begs the question of why, after so many millions have already been paid into Novo Banco to keep it barely afloat, didn’t the Government step in and nationalise it back in 2014 when it was set up instead of setting up a resolution fund which even former finance minister Mário Centeno called the “worst resolution fund in the history of banking in the EU.”
The latest controversy to hit the bank and its beleaguered president António Ramalho involves the sale of a portfolio of properties that has been on its books since the last financial crisis, and which has led to huge losses that have had, some claim, to be paid for out of the resolution fund.
Marcelo Rebelo de Sousa said this week that the: “Portuguese have the right to know the truth” about the sale operations and recalls that he had called for a transparent audit into the matter two years ago, leaving him with the feeling that he is “preaching to the wind”.
The president says he wants “a full clarification” by “all and any means” into what has “recently been going on at Novo Banco” and is awaiting the results of an audit which should have been completed this month.
“It is important that there is total clarification, either by legal or non-legal means, by the competent authorities on what happened in the recent past and which involves directly and indirectly the money of the Portuguese” (tax payers).
Stalwart Socialist Party anti-corruption campaigner Helena Roseta has been equally loud in her calls for clarification and explanations.
In March 2019, the then Portuguese MP had confronted António Ramalho in Parliament as to why the bank had allegedly sold off the properties below market prices.
The scandal centres around the sale of a portfolio of properties called ‘Viriato’ which has been mired in suspicions from the start.
The newspaper Público reported on Tuesday that the bank had “paid a buyer to take the properties off the bank’s accounts, resulting in losses worth millions for which the resolution fund had to pick up the bill”.
“Now, a year on, I can say that I was right. Just as well! It’s not now down to me to start off an investigation, but I can say that I had been right all along,” said Helena Roseta to news site ECO.
The bank has maintained all along that: “This operation was not done at knock-down prices, but at market prices”.
Helena Roseta said, “It just doesn’t make sense for us to be paying for a black hole in a bank that is selling off properties below market price in an issue that is of interest to many in the State, that was my line of thinking.”
“My problem with all this is that I had been right well before (anyone picked this up) and no one took any notice of what I had been saying, starting with the PS benches in parliament who went straight to the papers saying I was totally wrong and that the properties had not been sold off on the cheap,” said the former PS MP.
Novo Banco President Antonio Ramalho has been insisting that the sale of the properties has not caused “any direct losses” to the resolution fund.
He also rejects the idea that the properties were sold off at bargain basement prices, stressing that the sale operation announced in 2018 had been agreed first with the resolution fund and had no direct cost on it, and that: “Overall, most of the properties were not covered by the capital protection mechanism.”