January 19, 2021

The ECB urges Novo Banco to reduce its non-productive credit

The ECB urges Novo Banco to reduce its non-productive credit

Correspondent in LisbonUpdated:

The European Central Bank urges Novo Banco to restore its non-productive credit, which currently occupies 22.4% of its global portfolio and the institution chaired by Mario Draghi wants you to lower up to 10%. It is the inescapable condition that the ECB requires to guarantee the viability of the heir entity of the extinct Espírito Santo.

The measure considers that the sale of the 'malparado', according to the Portuguese denomination, must be undertaken as soon as possible since the situation of the old Portuguese emblem can be described as critical.

So much so that the Portuguese State has been in the position to inject 6,000 million euros in the last five years to avoid the collapse of Novo Banco and not to repeat the economic catastrophe represented by the bankruptcy of Espírito Santo in August 2014.

Therefore, the European Central Bank takes action on the matter the same week that António Ramalho, current president of the firm, recognized losses of 1,150 million euros.

As a result, the request for a rescue was immediate and the Prime Minister, the Socialist António Costa, they are seen and wanted to cover the barrage of criticism for the role of the Government and also for the position of the discussed Bank of Portugal. Above all, because more than 17,200 million euros have already been used, from the public treasury, in order to stop the bleeding of the financial system as a whole.

Most of the accusations of mismanagement are embodied in the finance minister and president of the Eurogroup, Mário Centeno, who is said to have "cheated the Portuguese" and hid the real data in relation to Novo Banco, according to the leaders of the conservative opposition.

The circumstance occurs that the entity was sold to the North American fund Lone Star in 75%, with a clause that established in 3,900 million euros the top of the money of the coffers of the State that could be resorted in case of necessity. The other 25% is in the hands of the Resolution Fund, a consortium composed of other entities and managed by the Bank of Portugal. Novo Bank It already required an injection of 792 million euros in 2018, so that the sum totals more than 1,900 million in the last two years alone.

The sale to Lone Star had been authorized by Brussels as the most advantageous option so as not to further damage the credibility of the financial institution, which was founded in 2014 with the healthy assets resulting from the bankruptcy of the company. Espírito Santo

But the shadow of bankruptcy reappears on the horizon. And all in the election year, because next October 6 legislative elections will be held across the border.


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