António Ramalho, the boss of Novo Banco, does not have a definitive answer on the disclosure of large debtors and says the banking system has to regain public confidence
One of the steps in the noble but unachievable objective of bankers regaining public confidence, may be, in "very exceptional" cases, to reveal which debtors have caused such problems in the banking sector.
Ramalho’s bank is exposed to in excess of €500 million in bad debt but still he refuses to say who incurred these debts, dodging the question with circuitous statements such as, "This is perhaps the most morally difficult question to answer," when asked by Observador.
"The value of professional secrecy - which is something that you perceive because you also live with it - and that is part of what is the core of my banking ethics. But I do not fail to recognise that we have to make a serious reflection on whether this value does not give in very exceptional cases, and exceptional, to a higher value: recognition to society of weaknesses that have been costly at large," rambled the leader of the financial institution, which is 75% owned by the US vulture fund, Lone Star and 25% by Portugal’s Resolution Fund, supported by the banking sector and, as it frequently runs out of money, the nation’s taxpayers.
António Ramalho, two years into his job at Novo Banco, says that, "in some circumstances, the value of the system's reputational transparency may justify some clarity in this type of information."
Ramalho leads Novo Banco, created in 2014 from the wreckage of BES with an injection of €4.9 billion - €3.9 billion of which was public money yet the public does not know which debtors it is supporting.
Ramalho has reiterated that the recovery of the bank is a "marathon" which will continue to cost time and money - mostly taxpayers' money.
At present, the bank is under a contingent capitalisation mechanism which means the Resolution Fund, propped up by taxpayer funds, has assumed the liability of injecting a further €3.89 billion and already has had to stump up €792 million.
Ramalho does not agree with the Lloyds Banking Group’s chief executive, António Horta Osório, who argues that the principle of bank secrecy is at odds with the fact that public money has been used to save several banks.
"It seems to me to be elementary justice that the Portuguese know how this money has been applied and I think it is very good that Parliament is legislating that the banks that had public aid have to be obliged to disclose the list of major debtors," said Horta Osório, this May.
Portugal’s government and parliament is in favour of full disclosure of major debtors of publicly supported banks but the Portuguese Banking Association wants secrecy preserved.
"Banking secrecy is a cornerstone between bank and client," said the Association’s president, Fernando Faria de Oliveira, the former president of Caixa Geral de Depósitos under whose tenure many of the currently unrecoverable loans were written.
Currently running Caixa Geral, Paulo Macedo, says he also is against the possibility of being forced to disclose the major debtors, saying there is no possibility this will happen.
Meanwhile, taxpayers continue to pay for Novo Banco’s past lending excesses, despite it being majority owned by a US vulture fund.
