With indecent haste and the corpse of BES not yet cold, the Bank of Portugal has annoounced that it will decide the method of selling Novo Banco by the end of September.
Portugal’s central bank wants first to see which potential buyers are really interested in taking on the good part of the old BES and then it will announce the type of sale for what it still claims are the good bits held in Novo Banco.
Advisor BNP Paribas has instructions to get the paperwork in order before the month end and sort out the best way to package the business so it will appeal to a new owner.
Rather foolishly the Bank of Portugal seems happy that João Moreira Rato, the nephew of Ricardo Salgado (pictured) under whose management the whole Espirito Santo edifice collapsed, is in charge of negotiations between BNP Paribas and Deutsche Bank to get a prospectus into shape.
Regardless of the model that will be chosen for the sale of Novo Banco, it will be impossible to sell anything before the result of the Asset Quality Review of Novo Banco is produced by the European Central Bank which is taking a closer than hitherto interest in all of Portugal’s banks, both new and old.
A truthful prospectus for Novo Banco will include an explanation of its exposure to BES Angola, the repayment of around €3 billion in bonds to the Portuguese government, the indebtedness to the Portuguese taxpayer, the €3 billion advanced to BES by the Bank of Portugal and to the group of Portugal’s banks which helped fund the BES bailout.
If the lines are drawn correctly and creditors are informed whether their money lies with BES or Novo Banco then Novo Banco can be sold but it is unlikely that the price achieved will cover all the money pumped into BES and Novo Banco, thus leaving the taxpayer and Portugal’s banks nursing the losses.
