With Aethel Partners standing by with an offer for Novo Banco worth €3 billion, Correio da Manhã today has stated that the sale already has been agreed between the Bank of Portugal and the US Lone Star fund whose offer is €750 million plus the same again for refinancing.
The ‘close to zero euros,’ price from the US, as suggested by Correio da Manhã, comes as two more bidders have appeared, attracted by the knock-down price that the Bank of Portugal has either agreed, or is still weighing up, from Lone Star with which it is in exclusive negotiations.
Unless last minute bidders (Aethel, Cerberus and Kildare) link up with one of the bidders that have been going through the whole torturous process, the Bank of Portugal will have to turn down their bids, certainly one is substantially higher than the Lone Star offer, or declares the whole game over (yet again) and restart the game.
The government and the Bank of Portugal has been desperately trying to find a way of presenting this mess to the taxpayer in a positive light as the €4.9 billion used to create Novo Banco, supposedly meant to contain only the good bits of failed BES, came from the taxpayer and the Resolution Fund which in turn is funded by Portugal’s high street banks which can scarcely afford to lose the €3.9 billion they were forced to put into the newly created Novo Banco.
Any loss needs to be sold to the public as a huge success, challenging the political and PR skills of the prime minister.
There remain left wing appeals to nationalise Novo Banco but the nationalisation of Caixa Geral de Depósitos has been an unmitigated disaster and the public no longer trusts the government to appoint directors with anything other than avarice and self-interest as their prime motivators.
The Lone Star deal would leave the taxpayer with up to 30% of Novo Banco and thus facing unlimited liabilities as Novo Banco's loan book seems little better than the one held by the old BES which holds its old toxic debts.
This complex muddle is par for the course for the Bank of Portugal’s governor, Carlos Costa, and says little for the skills of Sérgio Monteiro, the person contracted on €30,000 a month to run the bidding process.
As things stand, and with the Socialist government determined to avoid a deal with Aethel Partners due to Aethel’s connection with Miguel Relvas (click HERE), Novo Banco may be about to be given away to Lone Star or the process needs to be halted and started up again with Carlos Costa banned from having anything to do with it.
The fact that a bidding process has been devised that is unable to get the best value for the taxpayer, leaves the taxpayer with many questions about the archaic systems wheeled out by Carlos Costa and his suitability to run a multi-disciplined central bank.
Why this is an abject failure:
"The sale process is proceeding favorably. I underline that the sale process is taking place favorably (...) and there is strong interest from potential investors," said Carlos Costa at a Parliamentary Committee of Inquiry into the collapse of BES and Grupo Espírito Santo.
Almost a year later, Novo Banco still was not sold, the Communist Party had submitted a draft law for nationalising the bank, the losses at what was meant to be the ‘good bank’ are €980.6 million so far and 500 staff have gone.
The European Commission says that the decision by the Bank of Portugal to return €1,985 million in senior bonds from Novo Banco to the old BES, “to strengthen capital ratios,” shook the national banking system.
Neither the hiring of Sérgio Monteiro, the former Secretary of State for Transport, nor the €17 million invested by the Bank of Portugal in legal and financial advisors, has led to a sale.
Having injected €4.9 billion in the creation of the ‘good bank’, the first attempt to sell Novo Banco failed. The Bank of Portugal concluded that it was not possible to sell Novo Banco without losses to the Resolution Fund and none of the three final proposals (from Fosun, Anbang and Apollo) reflected "the value of the institution".
The sale process was restarted and the acceptable bids have been lower than during the first, failed process.
Need I go on?
