Portugal's deputy finance minister today assured non-believers that the sale of loss-making Novo Banco will go ahead in November this year.
The vulture fund, Lone Star, is waiting for the completion of a €500 million debt swap that Ricardo Mourinho Felix said, “will be launched soon.”
The elephant in the board room are the various and very serious law suits lodged by disaffected bondholders who were stripped of their investments by the Bank of Portugal’s governor, Carlos Costa, who has spend much time trying to distance himself from the potentially catastrophic fallout.
Ricardo Mourinho Felix told a parliament committee that the EU banking supervisors and competition office are aware of his timetable which he then referred to as “tentative.”
"...we expect that the bond swap process, to be announced soon, will be concluded during the summer, so that the sale can be finalised by November," said Felix, lacking in confidence that he has a grip on this troubled sale which was supposed to be put to bed in August this year.
The Bank of Portugal has agreed a deal whereby Lone Star buys Novo Banco for a cash injection of €1 billion which it does not have to provide from its own existing funds.
Prior to this, the bond swap needs to go ahead to furnish the ailing lender with €500 million in fiddled cash.
It is not clear what the EU thinks of the whole deal and it still needs to authorise Novo Banco’s restructuring plan before the US fund can get its hands on 75% of the lender’s shares.
As for the €4.9 billion still owed to taxpayers, there is little chance that this will ever be repaid despite Carlos Costa’s glib assurances back in August 2014 that the taxpayer ‘could even come out of this at a profit.’
The bondholders who were robbed of their investment by the Bank of Portugal switching €1.5 billion in loans from Novo Banco to the bombed-out shell of Banco Espírito Santo, whose failure triggered this mess, are fronted by the formidable US BlackRock fund and have tried to block the Novo Banco sale until their cases are decided in court.
The second elephant in the room is a simple question: why did Carlos Costa decide to choose a known vulture fund offering zero pay-back on the €4.9 billion owing when other bidders offered cash of up to €3 billion for the high street bank?
