Just as pundits predicted, the billion euro losses as a result of the collapse of BES continue.
Today (Saturday) media reports claim the government has “admitted” the need for a new cash injection for Novo Banco, the bank that ‘rose’ (very much like a lead balloon) from BES’ ashes.
This is following the bank’s ‘bargain basement sale’ to US equity fund Lone Star, which critics warned was ‘not what it appeared to be’ (click here).
Observador reports this afternoon that while under-secretary of state for finance Mourinho Félix “admits the State may have to inject money into Novo Banco”, it “will not have an additional impact on the debt”.
Described as finance minister Mário Centeno’s “number two” Félix shied away from trying to hazard the bottom line cost, though reports cut to the chase:
“The contract allows for the Resolution Fund (made up from money from Portugal’s banks) to inject up to 850 million euros per year into Novo Banco with money loaned by the State”, said Expresso.
“Novo Banco hasn’t yet presented its results for last year, but up to September it had already registered losses to the order of 420 million euros”.
The trouble with today’s stories is that none are referring directly to the fact that the Resolution Fund “has no money”.
Answering questions on TSF radio, Mourinho Félix said that the injection of capital into Novo Banco would only affect Portugal’s public debt “if it was necessary to go to the markets for a loan to the Resolution Fund” – which, he suggests unlikely as the government has enough money in its financial plan to “accommodate” whatever is needed.
In layman’s terms this proves everything left-wingers predicted before the bank’s sale to Lone Star last year (click here): “taxpayers will go on footing the bill”.
natasha.donn@algarveresident.com
