Brussels, hurried sale and redemption of deposits led to heavy cost in Banif – Jornal de Negócios – Portugal

Do not cause losses to depositors. The Brussels force. The hurried sale. To the Deputy Governor of the Bank of Portugal José Berberan Ramalho, these are the three major reasons to justify the “high” financial burden that had the resolution of Banif.

One of the points have to do with the imputation losses to shareholders and subordinated debt holders of Banif, saving creditors with senior debt. “This decision was taken by the Bank of Portugal, in close coordination with the Ministry of Finance, and took into account the need not to jeopardize the financial stability, against a Banif liability structure in that a greater part of absorption losses would hit retail lenders and unsecured depositors, “said the deputy governor in the Banif commission of inquiry.

in a hearing this Tuesday, April 26, Berberan Ramalho (center in photo) also blamed Brussels. “A second reason for the high cost to taxpayers was heavy ‘haircut’ applied by the Directorate-General for Competition to the assets transferred to the vehicle (although part of this amount can be recovered).”

” the high cost to taxpayers also resulted largely on the conditions of sale, in a very short time and in a negotiating position greatly weakened by the absence of an alternative solution other than the settlement, “further he added in his speech the head of the banking regulator .

added cost of 3.3 billion

for Berberan Ramalho, who is also the executive chairman of the Resolution Fund, “is indisputable” that . there was a “very high absolute cost to taxpayers” to apply the measure of resolution to Banif

in the initial intervention, the banking regulator vice governor gave a description of the costs in solving the Banif: in terms aggregates, the cost of the measure amounted to 3.3 billion euros. A value that was above the amount set by the Bank of Portugal when the resolution of Banif was studied when, in the second half of 2015, the resolution of Banif was studied:. Was 2.9 billion

According Berberan Ramalho, the difference was due mainly to the discount imposed by the Competition Directorate-General in the price of assets transferred to the Octant: worth 2.2 billion were transferred worth 746 million euros, “haircut” 66%. The governor hoped Brussels would impose a lower discount.

And who paid the money? The funding spent by the imputation of losses to shareholders and subordinated creditors, an amount slightly above one billion euros, with funding of EUR 489 million that came from the Resolution Fund ( “the maximum extent permitted by law) – which was granted based on a loan granted by the State Fund -. and also a direct financial support of the State of 1,766 million euros that led to State costs of 2,255 million euros, which forced the amending budget

<. strong> you have to think about terms of bank resolution

in his opening speech, Berberan Ramalho said that Banif case “illustrates the need to reflect on the troubled banks.” One of the points is the existence of “conflicting objectives.”: “financial stability, risk to taxpayers and maintaining competition” According to the deputy governor of the Bank of Portugal, the Euro Zone, the “considerations of competition” have been “predominant” when they compare to financial stability and the protection of public funds. Hence talk a force of the Competition Directorate-General.

In addition, the deputy governor of the Bank of Portugal also expected to have reflections on the instruments to be used in resolving banks.