Entrepreneur blames NB for Prebuild collapse

 In Banks, Conference, News

Portuguese businessman João Gama Leão, whose company Prebuild left Novo Banco with a trail of debts worth €300 million, is yet another voice who has joined the chorus of criticisms levelled at the bank from its debtors.

The bank, which was set up in 2014 after the collapse of Banco Espírito Santo that same year, is the currently the subject of a parliamentary inquiry into mismanagement.
The entrepreneur, whose company collapsed after Novo Banco refused to lend it more money and called in the loans, told the commission “Novo Banco had an attitude of let’s liquidate” and said this was the case in his opinion.
The former Prebuild CEO said, “It is so much easier to close down a company and then go cap in hand to the tax payers to ask for the (lost) money, than help a company in difficulties.”
In 2017 a capital contingent mechanism was set up for Novo Banco when 75% of Novo Banco was sold to the US equity fund Lone Star. The mechanism, which was given the seal of approval by the European Commission, obliged the Resolution Fund to inject money into the bank to cover losses from toxic assets which included loans to Prebuild.
“Ask Novo Banco, which has a public coffer behind it, if it is easier to save this company or let it go under for ever..I don’t know what contract the State made with the US group (Lone Star), but one thing is obvious to me: it’s easier for Novo Banco to have problems than advantages,” he said at the inquiry.
“Having problems — that was the economic logic they created — at Novo Banco is more advantageous because it can get capital easily,” added Gama Leão referring to the money in the resolution fund set up to capitalise the bank and meet its liquidity needs.
Prebuild, a group of private Portuguese capital formed in 2001, operated in the construction, industry and services sectors.
The group was founded when João Gama Leão decided to create a company in the prefabricated building sector. Prebuild began trading in the construction sector in Angola , basing its strategy on differentiation through quality and use of modern prefabricated processes.
From 2010 to 2012 the Prebuild Group had acquired a number of industrial companies in Portugal such as LEVIRA in 2011 (office furniture), IZIBUILD in 2011 (distribution of DIY, decoration and garden products) and Aleluia Cerâmicas in 2012.
The Group invested in the acquisition and, fundamentally, in the restructuring of the companies that it acquired and which it had been trying to make more viable by gearing them towards exports.
The group had been restructuring its industrial companies in a supply chain approach (to create customer satisfaction, improved efficiency and by removing obstacles) and implementing Lean Management to reduce the production cycle and work with greater productivity and less stock. Product innovation and design were seen as critical factors for enhancing its competitiveness.
The company, together with other Portuguese construction firms, was hit hard by the Great Recession and the economic crisis in Angola when the bottom fell out of the oil market.
Blaming Novo Banco, Gama Leão said, “They threw my company to the wall, like many others. If they hadn’t, today I would be managing one of the largest Portuguese groups,” he said. The company collapsed in 2019.