Novo Banco orders independent study into property sales

 In Banks, News

Novo Banco is to hire an independent international consultant to evaluate the sale of property portfolios that have been at the centre of controversy in recent weeks over allegations the bank sold them ‘for a song’.

News of the study was announced by TV commentator and PSD party stalwart Luís Marques Mendes on SIC TV quoting a letter written to him by the President of Novo Banco, António Ramalho.
“The President of Novo Banco told me in this letter that despite all these explanations, NB has decided off its own back to sort out the situation by: “Seeking an independent opinion from a well-known International consultancy that can respond to all the doubts laid out in an impartial way.”
Marques Mendes welcomed the independent analysis saying: “he who has nothing to hide has nothing to fear.”
And while the scope of this evaluation has not been made public by Novo Banco, it is expected to address the controversy that the bank, which has received tens of millions of euros in tax payers money and funds from Portugal’s banking sector to keep afloat since 2015, had itself given a loan to the buyer of the property portfolios in question for just that purpose.
In other words, Novo Banco lent the funds to the buyer on the cheap so that it could purchase the properties that were on its books.
According to Marques Mendes, António Ramalho called the act “a normal one” and had even been authorised by the European Union to do so, and therefore there was no conflict of interest.
Novo Banco is meanwhile being evaluated by Deloitte which is analysing its management activities between 2000 and 2018 with an audit that should have been delivered by the end of July, but in fact Deloitte only delivered the preliminary report.
A study is also being undertaken into the bank’s senior management decisions for 2019 after Novo Banco received a public bailout to top up its capital ratio levels.
On Monday, newspaper readers discovered that the bank had also sold its insurance arm GNB Vida at a 70% discount. The insurance entity was sold for €123 million to funds managed by Apax, resulting in a loss to Novo Banco of €268.2 million which was offset by a capital call from the Resolution Fund.
GNB Vida, now called Gama Life, was sold by Novo Banco in October 2019. The insurance company was sold at a 68.5% discount compared to its accounted value, creating a loss of €268.2 million for the bank according to Público on Monday (10 August).
According to Público, the machinations around the sale of the Portuguese insurance arm to fund investors managed by Apax, could indicate a collusion between US magnate Greg Lindburg (pictured) condemned for corruption and tax fraud in the United States, Paulo Ramos Vasconcelos, the then CEO of GNB Vida and the administration of Novo Banco with the goal of prejudicing Portuguese tax payers.
Paulo Ramos Vasconcelos, according to Público, was the CEO of GNB Vida between 3 August 2014 (the day that BES was wound up) until 14 October 2019, the date when the insurance arm was sold to the US investors.