Lame duck, Novo Banco, lost €10 million a week in the first quarter of 2017 but is proud to announce this was 47.5% less than it lost over the same period in 2016.
What it’s directorate calls a ‘recovery with reduced costs and the decrease of provisions and compensation,’ to many will be a familiar scenario of acute fiscal hemorrhage resulting in €131 million in red ink accumulated between January and the end of March.
Operating expenses decreased by 12.9% to €135.2 million, reflecting a ‘rationalisation effort’ (the closure of 100 branches and the exit of 1,300 workers,) which it conveniently blamed on the European Council.
At the end of March, the bank led by António Ramalho had 536 branches and 6,037 employees with provisions and impairments down by 60.5% to €137.4 million.
The optimistic management said that "the results of the first quarter of 2017 confirm the trend towards a recovery of the normal functioning of the Novo Banco and its position as one of the banks with the greatest deployment in the national business fabric."
Of concern, the banking income decreased by 22.8% to €180.8 million, due mainly to a decrease in net interest, but money deposited went up marginally from €25.1 billion to €25.2 billion.
The country meanwhile sits and waits for the new owner of Novo Banco formally to be approved.
The chosen buyer, US vulture Fund, Lone Star, has been allowed a huge amount of leeway by an increasingly irrational Bank of Portugal and ended up with a deal that saw the company with 75% of the shares and having to invest around €1 billion to shore up Novo Banco’s capital ratio.
The sale prospectus was for the sale of 100% of the bank, potentially leaving the taxpayer with losses but at least no outstanding liabilities. This has not happened nor is there a credible reason why the rules were altered, leaving us with the distinct impression that the Bank of Portugal's Carlos Costa was making it up as he went along.
The Resolution Fund, lent billions by the taxpayer, was expecting a return on its investment, or at least some repayment of the €4.9 billion thrown at the problem.
Brussels and the European Central Bank are dragging their heels over deciding whether to approve the sale of Novo Banco to Lone Star. There is a suitably vague and unofficial sale date of 'the end of the summer'. Meanwhile, the losses may continue.
