Lone Star is the chosen one but the offer has no risks for the State – Diário de Notícias – Lisbon

Fund was invited by the Bank of Portugal to deepen negotiations to “minimize or remove” the constraints of the proposal potential impact on the public accounts

The Bank of Portugal decided yesterday to invite the investment fund Lone Star to “deepen the negotiations” for the purchase of the New Bank. This was the way found by the supervisor to open a new round of negotiations that “minimize or remove” of the proposed north-american the “constraints” of the same with “potential impact on public accounts”. In question is the requirement on the part of the Lone Star state guarantees to implement your proposal, the requirement that the minister of Finance made it clear that it would refuse.

Despite having finally been a decision of the Bank of Portugal in relation to the race by the New Bank, the truth is that for all intents and purposes none of the candidates has been scratched from the race in spite of the privileged position in which the Lone Star is now. “This new round of negotiations with the potential investor Lone Star does not exclude the improvement of the proposals of the other potential investors”, says the statement of the BdP, announced yesterday close to midnight.

The government should assess the position taken by the Bank of Portugal even today, in the meeting of the Council of Ministers.

the Impact on public accounts

“The Bank of Portugal (…) concluded, based on the elements available on this date that the potential investor Lone Star is the entity best placed to finish with success the negotiating process leading to the acquisition of the shares of the New Bank and decided to invite you to a deepening of the negotiations,” said the supervisor in a statement yesterday disclosed.

The option of the central bank on open a new round of negotiations to extract the risk to taxpayers that the proposal of the u.s. fund presents seems to reflect the position taken yesterday by the government, through Mário Centeno, in interview with the DN/TSF made it very clear that “a guarantee of the State to support a private business and putting at risk taxpayers ‘money is obviously something that we’re not the perspetivar in this business”. As the final decision lies with the government, it is natural that some clauses of the offer have to be reviewed, otherwise the offer may be the sinker.

According to the statement of the BdP, and in spite of the proposal from the Lone Star to be the one that best ensures the stability of the financial system and the strengthening of confidence in the future of the New Bank”, the truth is that it is far from perfect from the point of view of the taxpayers. “At the current moment of the negotiation, the proposal from the potential investor Lone Star is the one that ensures these goals [stability and confidence] but presents constraints, including a potential impact on public accounts, which seek to minimize or remove in the deepening of the negotiations which now begins”, says the supervisor.

the position of The BdP comes after yesterday the government have thrown a bucket of cold water on the favoritism of the Lone Star, stopping any intention of associating public guarantees to the sale of the New Bank. The proposal of the u.s. fund provides, in addition to 750 million payment and a capital increase in the institution, the creation of a vehicle to stay with the non strategic assets of the bank, the vehicle in which part of the risk would be with the taxpayers.

not To be without alternatives, and thus to keep some pressure on the Lone Star, the BdP has also decided not to scratch any of the other candidates that “have already declared their readiness” to improve the proposals in the future. This opening negotiation may be decisive, since both the offering of the Apollo/Centerbridge, as presented by the Minsheng are essentially time-dependent: the first to end the analysis at the ex-BES, the seconds to obtain the required collateral.