Who decided, after all, the resolution of Banif? – Observer

“Who decides resolution processes is the resolution authority. It is the Bank of Portugal analyzing the solvency and liquidity conditions of the entire financial system. The process was accompanied by DG Comp and the government, but the responsibility is the resolution authority that has been informed by the government of the existing proposals. “

Mario Centeno , January 29, 2016, at parliamentary hearings.

“The fact that triggers the resolution communication Government on 19 December, it was not possible to sell the institution.”

Carlos Costa , January 29, 2016, at parliamentary hearings.

Carlos Costa and Mario Centeno gave one another the primary responsibility for decision taken at Banif: Resolution announced on 20 December 2015. The finance minister said on Friday in parliament that there was “a lot of exchange of information” between Centeno and the Bank of Portugal in previous days, a process that was also accompanied by the Director-General of the European Competition (DG Comp) and the Single Supervisory Mechanism (SSM, in Anglo-Saxon acronym). But who took, after all, the final decision?

There is no doubt that the resolution authority in Portugal is the institution led by Carlos Costa, sharing from January 1, 2016 these responsibilities to the Mechanism single European Resolution. How to recognize the own Bank of Portugal – here, for example – was “the Bank of Portugal, by resolution of its Board of December 19 Administration 2015, [which] stated that Banif was in at risk or insolvent ( failing or Likely to fail ) and decided to initiate the procedure of Resolution urgent the institution in the form of partial sale or all of its activity. ”

However, this decision of the Board of Directors originated in what happened last night (Friday, December 18). That was the day that the Ministry of Finance informed the Bank of Portugal that had not been possible to effect a sale of Banif under the process of selling the state’s position (60%), a process that had been organized by management of Banif but which turned out not to meet than he intended the government also restricted by European rules.

The government, moreover, according to the Bank of Portugal, soon reported on Wednesday (16) that the way the process was running meant that the Ministry of Finance thought it did not look “remains alternative other than go through the resolution of Banif”.

That said, what makes this issue a little more nebulous is the how the resolution was presented by António Costa on the night of Sunday, December 20. At the time, in his speech to the Portuguese, the Prime Minister portrayed this as a “ option of the Government and the Bank of Portugal “, adding that “all alternatives were evaluated and the solution has proved found if, between legally possible solutions, the one that best serves the public interest “

And another statement issued by the government on 16 January -. precisely by the Ministry of Finance – helps even more to the difficulty of defining a father for this solution. A “clarification” of the Ministry of Finance refers to in the second paragraph, the “ Government decision on the resolution of the Banif [that] was aimed at preserving financial stability and maintenance of conditions financing of the Portuguese economy. “

In the same statement, the government back to say it was he himself who took concrete decisions process resolution, as to impose losses on subordinated debt of Banif -. one that is give birth to those who are already called the injured Banif

The Observer contacted, about two weeks, the Ministry of Finance to clarify the reason why the government has arrogated in this statement, responsibility for the decision, but got no response to this issue. This article will be updated with an answer if she gets

The Observer contacted an attorney experienced in financial legislation, preferring not to be named, made the following clarifications:.

The state was the majority shareholder of Banif and, as such, a skilled part in any operation. Converge in his status, such as shareholder and the quality of policy maker and interlocutor with the European institutions and the Bank of Portugal. Notwithstanding, the resolution measure is legally attributable to the Bank of Portugal , although their assumptions – in this case, the recapitalization – dependent on the state. No wonder, especially in this case, the reality of the facts will eventually impose the accuracy of legal powers. And that this ambiguity show through in communications -. More in the Ministry of Finance than in the Bank of Portugal, which has greater care in the legal rigor

Inconclusive . When the Bank of Portugal Mário Centeno and shoot at each other the responsibility of the resolution are not just talking about the same thing. In theory, this complex process should have been a relatively simple route: State can not sell its position; informs the Bank of Portugal; Bank of Portugal decides to let settle or proceed to resolution; Bank of Portugal decides concrete contours of the process. However, how the government refers to this process creates doubt about who arrogates to itself, really, as the father the resolution – whether it’s the government or the Bank of Portugal, the authority of resolution. It is recalled that in the case of Novo Banco and the recent decision to move some obligations senior back to the BES, the government calls itself any responsibility in this resolution process. On the contrary.