Government and Lone Star try to compromise on the New Bank – Cash

The Government and the Lone Star are trying to a compromise on the public guarantee that the u.s. fund requires to close the purchase of the New Bank. When investigating the DN/Money Live, the Lone Star has shown openness to find a solution that satisfies both sides of the negotiation, and nothing is deleted.

The contacts have intensified, not only with the Lone Star – which presented, according to the Bank of Portugal, the best proposal – but also with the other stakeholders, in particular with the consortium Apollo/Centerbridge and still with the chinese group Misheng (interested in the sale on the market of a stake of about 50%, but that will be with difficulties in taking from China the capital required to present the guarantee requested).

This is even confirmed when Money Live official source of the Ministry of Finance. "The Government has received all the potential interested parties, always at the request of the same, in the context of the monitoring of the process of sale of the New Bank, given the importance of the bank on the stability of the financial system."

The process is being conducted by the Bank of Portugal, but the Executive is to intervene in the negotiation to seek to close the deal as quickly and with the best possible solution, found still the Cash. The process must be completed until August, the deadline agreed with Brussels, or else the New Bank will be the target of a "liquidation orderly". Mário Centeno, however, has already noted publicly that the solution found will not have costs to the taxpayers. Hence the necessity of removing the public guarantee of the negotiating table.

The public guarantee required either by Lone Star or by the consortium of Apollo/Centerbridge is, the second was advanced by the media, of 2.5 billion euros to cover possible risks of assets that are not well evaluated or possible surprises in the balance of the side bank, which aggregates non-strategic assets of more than nine billion euros.

The requirement of government guarantees has been the rule from the Lone Star when it invests in troubled assets. The same happened in two banks bought in Germany, CorealCredit, in 2005, and the IKB, in 2008, where the German Government introduced the guarantees were requested, but were not used.
And the negotiations should continue, because the Lone Star guaranteed that it would "continue to work tirelessly with the Bank of Portugal, the Resolution Fund and the Portuguese Government to ensure a final agreement to support the restructuring of the New Bank, to a benefit of long-term customers, employees, creditors, and of the Portuguese economy in general", according to a statement the fund released last week, after the Bank of Portugal have said that this was the proposal in the best position.

"we Understand the importance of giving the necessary steps, in partnership with all the stakeholders of the New Bank, to help establish the financial health of the institution, with a long term perspective", emphasised the fund, which already has an office in Portugal, and is the owner of shopping centres, the Dolce Vita and the marina of Vilamoura, in the Algarve.

Nationalization is a hypothesis?

While the contacts with the interested parties intensify the political debate on the hypothesis of nationalization has been gaining strength . The PCP wants to take the debate in Parliament, already in February, the nationalization of the New Bank. Communists and Block argue that the nationalization of the bridge bank shall be final. Already the HP also has been advocating the nationalization and want to put the topic on the agenda. "The question here is not whether nationalization is permanent or temporary," said Joao Galamba, a spokesman for the PS, in the Forum of TSF that discussed the possibility of the New Bank to be nationalized.

Mariana Mortágua, Left Block, argued that the New Bank should stay in State, but separated from the CGD. "There is interest for the State to maintain the two separately," he said in the Forum TSF. Already Miguel James, PCP, noted that the New Bank should be a public bank", for reasons of accounting and political.

on The other side of the bench, the PSD came to defend the stance of the Finance minister, Mário Centeno, saying that the Government "favours" from the sale of the bank, and that nationalization should only be "seen as a weapon in bargaining", said the deputy Duarte Pacheco.