The Financial Times reported today that, in its well-informed opinion, Novo Banco will be sold to a Chinese bidder.
The sale will yield more than €4 billion with Anbang Insurance and Fosun International vying for the bank formed last August as part of the Bank of Portugal’s 'resolution' when Banco Espírito Santo went bust.
This deal, according to the Pink ‘un, shows a growing optimism about the future of the Portuguese economy, which grew 0.9% in 2014 after a consecutive decline over three years.
The Bank of Portugal expects GDP to grow 1.7% this year and reach 2% in 2017, figures still disputed by the IMF which has pointed out Portugal’s lack of progress in cutting the state payroll and still high unemployment figures.
In addition to the Chinese bidders, three companies are still in the game: Santander, and from American, Apollo and Cerberus.
The Chinese always have had the upper hand due to their seemingly limitless resources and a strong desire for footholds in Europe in the key sectors of energy, insurance and banking.
The biggest financial investment by a Chinese group in Europe so far was the 2007 USD3 billion purchase of 2.6% of Barclays Capital by the China Development Bank. Should Novo Banco go for €4 billion or more, this would be the biggest Chinese deal so far in Europe.
However, €4 billion is not enough to cover the €4.9 billion loan made by the Portuguese taxpayer and by the Resolution Fund which contributed €700 million transferred from Portugal’s banks.
No mention was made in the FT of Novo Banco liabilities but the Bank of Portugal has stated unequivocally that the BES bondholders who complain of being duped into buying bonds in Grupo Espírito Santo companies, which now are valueless, have no claim on the assets of Novo Banco.
The position taken by Portugal’s central bank has yet to be tested in court, but soon will be by big hitters such as Goldman Sachs which also claims to have been tricked and is pursuing legal action in London where it hopes to get an unbiased ruling that is not delayed for years, as might well be the case in Portugal.
The BES bondholders and Goldman Sachs together are nursing losses of over €1 billion but there are many more companies and groups affected by Ricardo Salgado's secretive reign which led to the collapse of the Espírito Santo empire amid accusations of fraud and money laundering.
