The former Secretary of State for Transport and Communications, Sérgio Monteiro, has been hired by Bank of Portugal to front a new sale process for Novo Banco, the 'good bank' created after BES went bust under the regulator's nose.
Monteiro’s new job results from a need expressed by the Bank of Portugal and Novo Banco to have someone exclusively running the sale, as those who had been in charge until now, suddenly appear to have ‘other functions in regulating the financial sector.’
This cop-out was reported at the end of October and it now has a price tag; €30,000 pcm for a taxpayer-funded job in a country where the minimum wage is not far over €500 a month.
Whether those who are still waiting for the return of their funds from the old BES, or whether a new socialist and left wing government will agree that Monteiro is worth €30,000 a month, remains to be seen.
Carlos Costa, the current governor of the Bank of Portugal, famously failed to offload Novo Banco to any of the selected foreign buyers whose low offers reflected both their business 'nous' and Costa’s lack of salesmanship in a process that clearly he wished would just go away.
The state still needs €4.9 billion to clear the debt owed to the Resolution Fund and to the taxpayer, but Novo Banco now needs an extra €1.4 billion injection after it failed key sections of the recent ECB stress test.
Novo Banco still contains ‘unquantifiable liabilities,’ according to a PWC audit, as there are many claims still to be settled from former BES investors who were duped in a widescale scam overseen by Ricardo Salgado.
Monteiro, the 41-year-old former Secretary of State for Public Works, Transport and Communications in the Pedro Passos Coelho government, simply has been told by the Bank of Portugal 'to sell Novo Banco,' but there are deeper considerations.
Monteiro’s contract of service is with the Resolution Fund, the public body managed by the Bank of Portugal, and was approved this week by the Bank’s board of directors led by Carlos Costa.
Monteiro has 12 months from November 1st, 2015 to ‘finalise the sale of the Novo Banco.’
The former Secretary of State in Pedro Passos Coelho's government now is responsible for "ensuring the coordination and management of the entire operation (of disposing of Novo Banco), including the monitoring of the transformation programme to be implemented by Novo Banco, which is an essential condition for its sale," read today's statement from the Bank of Portugal.
Before Monteiro joined the Passos Coelho government, he worked at Caixa-Banco de Investimento, part of the publicly owned Caixa Geral de Depósitos Group where he was an executive director.
In his new role as a comfortably paid consultant to the Bank of Portugal’s Resolution Fund, Sérgio Monteiro's take home pay will be equivalent to the salary and bonuses he earned in his old job at Caixa-BI as an executive director.
Remarkably, the new contract does not reward Monteiro for a successful sale, i.e. one which repays the state and the country's banks. He sensibly has gone for a 'salary only' deal to perform a task that many consider impossible. It was suggested by the Bank of Portugal during the contract negotiations that Monteiro should receive a bonus linked to the sale value of Novo Banco, but this prompty was rejected.
The last time the bank was up for sale, the Bank of Portugal opened a tender to sell the business for a minimum of €4.9 billion, the exact sum needed to repay the Resolution Fund, plus the taxpayer loan arranged without consultation by the Finance Minister Maria Luis Albuquerque.
If there was a bonus payment for any sale amount over €4.9 billion, it is highlly unlikely Monteiro would ever qualify to collect it.
In January 2015, they were 17 companies interested in buying the bank, but this soon was reduced to three; the Chinese insurance company Anbang , the Chinese group Fosun and the US private equity fund Apollo.
The contest was suspended in September 2015 as the 'unquantifiable liabilities' referred to by PWC kept offers way below the amount needed by an increasingly desperate Carlos Costa.
One of the grey areas was the ECB stress test which proved a justifiable concern as €1.4 billion in extra capital now is needed to ensure Novo Banco is operating within European financial guidelines to ensure its solvency.
Monteiro also was in charge of the controversial TAP sale process which was rushed through just before the Passos Coelho government was forced from office, with an excuse that few believed i.e. that the airline would collapse unless the deal was signed with Gateway which would inject emergency capital.
Bank of Portugal boss Carlos Costa has tried to justify his decision to appoint Monteiro to head the Novo Banco sale due to the "complexity" and the "challenges” of getting the job done, a job which notably he failed himself to complete.
Monteiro said his mission in politics was limited to working in the last government, and that he always was going to return to the financial sector.
Sérgio Monteiro was without a political appointment with the fall of the Passos Coelho government but remains very much in the political arena as the new Socialist government has pledged to reverse or halt state sell-offs.
Whether the Novo Banco sale is covered by this blanket assurance remains to be confirmed by António Costa, Portugal’s new prime minister.
