The governor of Banco de Portugal, Mário Centeno, said this Tuesday that Novo Banco “was not a good bank” and “it was necessary to make it a good bank”, recalling the “legacy of BES” that marks the institution.
“Once Upon a time”. This could be the beginning of any story, but it was the way the former ex-finance minister wanted to start his intervention on the Novo Banco inquiry commission, making it clear that “the history of the banking system globally during the crisis financial and sovereign debt ”lacks the usual charm of short stories.
Mário Centeno, who was in charge of Finance when Novo Banco was sold to Lone Star, made it clear that this sale was the result of “a legal imperative” and “it was the form found, difficult, with risks for the Resolution Fund, within the framework the functioning of a contingent capital mechanism ”.
“O Novo Banco was new, but heir to old problems and with many and complex challenges ahead. It was not a good bank. It was necessary to make it a good bank and its restructuring ends this year, attested by the European Commission. So the Portuguese institutions allow it ”, emphasized in his hearing of the Eventual Committee of Parliamentary Inquiry on the losses recorded by Novo Banco and attributed to the Resolution Fund.
The sale of a transitional bank, recalled the governor of Banco de Portugal, “was not a sale of any property that if it is not sold today, it will be sold tomorrow”.
“This call for procrastination is called bad luck in finance”, Shot.
Centeno made a point of leaving a warning about this being “a reference institution in the national banking space”, the “bank preferred by millions of families and companies to deposit their savings and to obtain financing, to invest, innovate and create quality jobs ”.
“Let us remember that when we say Novo Banco, we mean BES’s legacy”, he appealed, adding: “The overwhelming majority of the issues raised in this CPI concern BES. They had their originated at BES and not at Novo Banco. We must keep this in mind ”.
Process was “painful” and “a lesson” for everyone
In addition, Mário Centeno said that the Novo Banco process was “socially, politically, financially painful”, and “a lesson” for everyone involved.
“IT’S painful socially, politically, financially, in terms of the whole process that involves the banking system, and therefore it is a lesson that we all have to learn, ”he said in parliament.
The BdP governor and former finance minister recalled that “it is almost seven years since the day of the resolution” of BES, which took place in August 2014, being “a difficult process at any latitude, in any country, and in any jurisdiction. financial, political, banking ”.
“Seven years is a long time, in fact. And that is it, for me personally, at this moment as governor of Banco de Portugal, and in the previous functions that I held, what most defines this process ”, said the leader of the central bank about the past time.
Mário Centeno also recalled BES ‘non-recourse to the public capitalization lines made available during the Economic and Financial Assistance Program (PAEF), known as’ troika’, during the government of Pedro Passos Coelho (PSD / CDS-PP).
“This is a key moment in an early intervention, if we could have done it, at Banco Espírito Santo. There were the financial means, there was the institutional framework to do this, and there was an understanding of all the players, of all the agents in the sector, of the importance of coming out of the crisis with a capable financial system ”, he said.
Responding to deputy João Paulo Correia (PS), Mário Centeno noted that “that was not what happened at Banco Espírito Santo, so when we reach the moment of resolution, we actually have a set of lower quality assets”.
Centeno warned of risk “24 times”
According to the newspaper Expresso, the governor of BdP also rejected the accusations of not having, at the time of the sale of Novo Banco, made it clear to the Portuguese the risks that were present for the State, stating that, at the time of the sale, he referred times the word ‘risk’ ”.
For the instability he had encountered, Centeno shot at other officials. In the case of BES, he argued that the “resolution resulted only and only from the actions and omissions of the successive BES boards of directors. Here, too, there was no bad luck. If luck is what happens when preparation meets the opportunity, bad luck happens when incompetence meets deceit and the practice of ruinous management acts. And therefore, it must have responsible persons, as it is already legally proven ”, he shot.
In relation to the alternatives for sale, he recalled that Lone Star’s initial proposal included a guarantee of 7,800 million euros, which he refused, and said that the settlement would be a “dark alternative”, with direct costs of 14 billion euros, to that indirect costs would have to be added that are difficult to estimate, writes Público.
With regard to nationalization, he guaranteed that he was not put aside, but he argued that it would incur high costs, largely because of the demands that would be made by the European Commission.
In addition, he recalled that Novo Banco can only buy banks from next year and, therefore, considers that the hypothesis of being the buyer of EuroBic does not fit with the calendar that is on the table for the sale of the holdings of shareholders, in which Isabel dos Santos is the most representative.
“EuroBic is in the process of being sold, and as far as I know, Novo Banco cannot make acquisitions at this time. Novo Banco must be released by the European Commission, and it is not a process that, at the moment, is compatible with the timetable for EuroBic ”, quotes Expresso.
Novo Banco is prevented from making acquisitions within the scope of its restructuring plan that will continue until the end of this year, a plan that came out of negotiations between the European Commission and the Portuguese State in 2017, when the sale of 75% of the capital to the Lone Star.