Novo Banco’s declared 2017 losses of €1.4 billion have been discussed in parliament, with the Minister of finance admitting he does not yet have "enough information, beyond what is known" to explain what went on.Normally on-the-ball Minister Mário Centeno acknowledged in parliament that it is "necessary to determine the rationale for this intervention," referring to the additional €792 million that the Resolution Fund now has to inject into the ailing bank to strengthen its capital ratios.
More than half of this amount, some €450 million, will have to come from yet another taxpayers' loan, "but this operation still has to be validated," confirmed Secretary of State, Ricardo Mourinho Félix.
The finance minister was being grilled in the budget and finance committee, mostly by the Communist Party MP, Miguel Tiago, after Novo Banco announced a net loss of €1.4 billion, driven by net impairments and provisions of €2.1 billion, up 50% on 2016.
The sale of Novo Banco included a contingent capital agreement, whereby the Resolution Fund must compensate the bank to the tune of up to €3.8 billion for losses recognised on assets, if the bank’s capital ratio falls under a certain level.
Mário Centeno said that the Government still has to make an assessment of the €2 billion impairments figure announced by the American owned bank, but at least realised that almost all the losses were from non-performing loans which, he said, "were inherited from the former Banco Espírito Santo" – despite Novo Banco being set up with only the bust bank’s ‘good assets,’ which seem to have turned to dust.
Ricardo Mourinho Félix said that the accounts at Novo Banco “are pretty easy to do” as the €2 billion of losses so far have eaten the €1 billion of capital injected by US vulture Fund, Lone Star, so the Resolution Fund has to chip in €792 million.
Few at this stage care to remember that Novo Banco already has cost taxpayers around €4 billion with a liability of a further €2 billion if ripped-off bondholders win their claim against the Bank of Portugal whose governor switched bonds from ‘good bank’ to ‘bad bank’ thus wiping out the investment.
Mourinho Félix repeated the information already given by the Resolution Fund last week, for the need for ‘prior validation’ of the Novo Banco losses, adding that Lone Star can’t just write off loans to suit itself, there is a process and rules, oh yes.
The Secretary of State for Finance justified the €721.7 million that the Resolution Fund has to inject into the bank with "loss sharing" with Lone Star.
"What we have here is loss sharing between the Resolution Fund, bondholders subject to the bond exchange operation (which injected €500 million in capital) and Lone Star, which injected €1,000 million," into Novo Banco, said Félix who consistently fails to distinguish beween the bank's owner and the continued forced investment of public funds into this privately owned company, for which the phrase 'good money after bad' could have been coined.
As for the bondholders lawsuits that challenge the terms of the BES resolution, demanding compensation for what they see is theft of fnds, if their €2 billion claim is upheld, Mourinho Félix said any compensation payment will be the responsibility of the Resolution Fund and of the State (aka taxpayers) - not Lone Star.
How does Novo Banco repay the public’s unwitting generosity? By raising charges for its long-suffering customers.
As of June 30, the bank is raising many online banking charges with many free-to-use services soon to cost money.
The strategy of gouging existing customers is the same as at Caixa Geral de Depósitos, owned by Portugal’s public, with both chief executives wringing their hands with insincerity as they hit up customers for more cash.
A transfer to another Novo Banco customer soon will cost a whopping €1.96 with urgent transfers to other financial institutions, made through the 'free and safe' homebanking portal, will cost an unprecedented €26 from the end of June.
