The Novo Banco team that had been charged with rebuilding the balance sheet of the 'good bank' split off from the collapsed BES, and restoring confidence in the disgraced institution, has quit.
The executives selected by the Bank of Portugal to lead the resurgence of the remaining good bits of the old BES has been hamstrung almost from day one as Carlos Costa from the Bank of Portugal continued with his own agenda to sell off Novo Banco in short order, even appointing BNP Paribas to pre-select interested parties.
The official reason given by the well-respected Chief executive Vítor Bento for his departure and that of finance director Joao Moreira Rato and deputy Chief Executive José Honorio was that the initial instruction to revive BES with private money had been altered beyond recognition since the government shovelled taxpayers money into the bank and devised the old bank/new bank formula.
The resignations were announced on Saturday morning as an accord could not be reached between the team and the Bank of Portugal's directorate.
The Novo Banco management were building a long term future for the business have been working to a medium term business development plan which may now have to be rewritten under a new chief executive.
With Pedro Passos Coelho's pressure being felt through the Bank of Portugal the indecent and suspicious haste to sell off Novo Banco as soon as possible made the positions of Bento and his team, untenable.
Vítor Bento is a class act and appears to be displaying an integrity seldom seen in Portuguese financial circles. He and his fellow team members deny any conflict with the central bank, which can not possibly be true but will help to smooth their exit which is a huge blow to the already shattered credibility of Carlos Costa at the Bank of Portugal.
"Our decision to resign is due to the fact that our mandate significantly changed since we began our roles in mid-July. During our time at Novo Banco we have contributed to the stabilisation of the bank, taken steps to normalise operations to improve systems and have launched a medium-term plan," according to a statement from the three departing executives.
This excuse is valid, but it is still an excuse. Vítor Bento first was charged with saving BES using market funds before the Bank of Portugal decided on August 3, 2014 to stump up €4.9 billion for newly created Novo Banco. This money came from a legacy Troika account set up to help Portugal's ailing banks.
Ever since that time the Bank of Portugal has been seeking to sell off Novo Banco, at first covertly and then openly, thus undermining the efforts of the new executive team under Bento to hold Novo Bank steady, raise staff morale which had hit an all time low, and to develop the business.
Bento did comments that "a process for a swift sale of the bank has already been launched and is being managed by the Resolution Fund and the Bank of Portugal. We now feel that the right thing to do is to hand over the reins to another team."
Bento was hand picked by Bank of Portugal governor Carlos Costa to replace the disgraced Ricardo Salgado who had been forced to resign under pressure from Costa.
Bento’s team had offered to resign when the bank was split into good and bad but were persuaded to stay on. Now that the government is rushing into a firesale of the good bank Novo Banco before even the BES branch fascias have been changed, Bento leaves with his integrity intact and the blame for this latest embarassing set back in the lap of Bank of Portugal governor, Sr Costa.
BES and Novo Banco managements have encountered difficulties in tracing and recovering Espirito Santo Group’s debts with investors and family even trying to block the sale of the insurer Tranquilidade and Bento's team have said that illegal activity has taken place at BES involving the financing of Espirito Santo businesses using money from BES clients.
Maybe it is a good time for Bento and his colleagues to leave after all.
