NB faces Angola €294M exposure
Novo Banco’s accounts for 2020 reflect an increased exposure to risk from the Angolan bank Banco Económico which had, before 2014, been part of the Espírito Santo group.
The Angolan bank’s rating has been put under a negative outlook review by the ratings agency Moody’s, although the bank’s administration has insisted that it meets the highest levels of quality and best practices.
BES Angola was responsible for some of the greatest losses for Novo Banco (NB), which could go well beyond €4.1Bn and which had already been written don in the accounts of the Portuguese bank led by António Ramalho. But the situation could cause further losses of €294 million for NB.
The reason why is that Banco Económico, which was – but is no longer – under the control of the National Bank of Angola is in an “extremely serious financial situation” according to an internal document from the institution which the newspaper Jornal Económico has seen.
Moody’s put the bank on a negative outlook because of delays in the recapitalisation of the bank which had once been part of the BES Group and had been called Banco Espírito Santo Angola before the collapse of the ES Group in 2014.
The delays in recapitalisation resulted in a complex structure of governance at the bank renamed Banco Económico in 2014.
The new bank was subjected to a significant restructuring in the years that followed, including to its senior management and board structures.
According to estimates from Moody’s, the Banco Económica has a “capital shortfall of over 50% in assets to risk, representing around US$1.3Bn (€1,1Bn).