The latest and third boss of Novo Banco finally has taken over, replacing Eduardo Stock da Cunha who returns to Lloyds Bank in London.
António Ramalho wrote to staff last Friday and commented that ‘these are uncertain times, but times of great opportunity.’
The former head of Portugal's road and rail infrastructure company was appointed to the banking post a month ago but the European Central Bank has only just given the all clear.
In his inaugural message, Ramalho said that the current uncertainties are linked to the imminent arrival of a new owner by the end of the year, but also to the general problems in the banking sector, to new and changing regulatory requirements and to the change in behaviour needed in the financial sector towards customers.
"Uncertainties are the name of the game in the financial industry for the coming years. For many this is a threat, but for Novo Banco this may be an opportunity," said the new man at the helm who promised to avoid the use of ‘evasive promises.’
António Ramalho spoke of focusing on three key areas: a "business transformation plan," a "governance change plan" and a "capital change plans."
As for the current sales process for the loss-making bank, the Bank of Portugal wants to close the file in 2016 and is considering BPI, BCP, Lone Star and Apollo-Centerbridge, none of which are remotely likely to come up the necessary €4.9 billion needed to get the taxpayer and the Resolution Fund paid back in full.
Expresso today claimed that bids for Novo Banco will be closer to €40 million than €4.9 billion and that the government will recover hardly any of the money sunk into the doomed venture by Bank of Portugal governor Carlos Costa.
None of the offers for Novo Banco include covering €2 billion in senior bonds that were transferred to the BES ‘bad bank’ – in effect writing off the debt for Novo Banco and shifting the losses onto creditors such as Goldman Sachs.
If the courts find that this sleight of hand by Carlos Costa was illegal and that Novo Banco owes the €2 billion after all, any new buyer will expect to be compensated by the State, aka the taxpayer.
Another prospect is that the €3.9 billion stumped up by the Resolution Fund will be turned into a very long-term debt with payments spread over several decades.
This disastrous scenario for Carlos Costa comes at a time when the total debt from another of his bailouts, BPN, may exceed €9 billion by the time the bank finally is wound up after it went bust nine years ago.
