Deepening concern over the possibility that the US vulture fund, Lone Star, may gain control of Novo Banco, unions and left wing luminaries are increasing the pressure on the government and the Bank of Portugal to opt for a "transitional nationalisation."
The National Union of Banking Staff and Technicians has added its influence to those calling for an end to the current long-running and seemingly haphazard negotiations that have seen Portuguese contenders drop out of the running, China’s Minsheng head the list only to fail due to a lack of funds and now, Lone Star, in the front running despite its track record of buying undervalued assets and selling them on as soon as it can sniff a decent profit.
The union said today that Novo Banco should not be the target of a "hasty sale" or be broken up by a new owner keen to release value for its own shareholders.
The union issued a statement highlighting "the important share of the Portuguese banking market" that Novo Banco represents and "its special importance in supporting small and medium-sized national companies and, consequently, the dynamisation (sic) of the Portuguese economy."
It is essential, continues the union's missive, that a decision is taken to ensure that Novo Banco "balances a commitment to maintain jobs and a management based in Portugal, with the preservation of the Bank's current knowledge, technology and commercial structures for the benefit of the Portuguese economy."
Paulo Marcos, president of the National Union of Banking Staff and Technicians, considered that "transitory nationalisation could be an appropriate means to guarantee these objectives."
Moreover, Marcos says that "the future of Novo Banco should correspond to a sustainable development model: viable, credible, visionary and shared with its employees who have been able to keep the bank going as an essential institution in the banking sector and for the economy.”
Marcos also wants the Government to ensure Novo Banco’s employees have share options, “thus reinforcing their involvement" with the institution.
The union already has delivered a letter to the President of the Republic, the President of the Assembly of the Republic, the Prime Minister, the Minister of Finance and the Governor of the Bank of Portugal, giving them all the benefit of its views on behalf of its members.
Last week, the National Commission of Novo Banco Employees said it wants the government to take the institution into public hands, albeit temporarily. This was in reaction to the Bank of Portugal revealing that Lone Star was in poll position to buy Novo Banco.
The former coordinator of the Left Bloc, Francisco Louçã, also has written to the Government stating Novo Banco should remain in public hands, but not integrated into Caixa Geral de Depósitos - one of the other, more unlikely options.
The Portuguese Communist Party has chipped in to say that it will propose a draft resolution calling for Novo Banco to remain State-controlled.
The President of the Socialist Party, Carlos César, said on Saturday that he views the current proposals for the purchase of Novo Banco as "vexatious," and considers the sale process has been a "fiasco" - a view shared by this organ.
The Bank of Portugal has not yet made up its mind which of the contenders will be successful, if any, and is continuing negotiations with anyone that wants to keep negotiating.
The main point of discussion now is the condition set by Lone Star and others, that the government, aka the taxpayer, underwrites future losses as the Americans are not convinced that the assets shown on Novo Banco’s books are all they are cracked up to be and that there are various court cases pending. Lone Star wants a counter-guarantee from the Portuguese state of around €2.5 billion - totally unaccaptable to the government as it has said all along that the sale of Novo Banco will be at no (further) loss to the taxpayer.
The Bank of Portugal’s governor threw in €4.9 billion to create Novo Banco when BES went bust in August 2014. The highest bid for Novo Banco, the BES 'good bank', currently on the table is €1.5 billion. The Resolution Fund, supported with money from Portugal’s banks, therefore is faced with a loss of €3.1 billion.
If Novo Banco is not sold in this current (second) round of negotiations, it will be wound up after the sale deadline expires in August this year.
