The hypothesis of the nationalisation of the old BES was placed on top of the table with a bang last week by the minister of Finance, Mário Centeno, and is even being taken seriously in the event that negotiations for a sale fail.
if you have any doubts about whether the statement of Rye have been only to press the purchasers, or whether it is already negotiating with Brussels this solution, the Finances say nothing. Is that, even though I have put nationalization on the agenda, the minister said that the sale is the priority, and the nationalization of a route of last resort. And can only be, because nationalization would have to be negotiated with the European Commission and would require a revision of the agreement with the General Direction of Competition, the basis of the current sales process.
A nationalization, to be accepted, would lead to a set of remedies, read further cuts in costs. In addition, it could have implications in the General Box of Deposits, because the State would be left with two public banks. For now, the DG Comp does not want to comment on the hypothesis of nationalization. What is on the table is a contest of sale, point end, says the regulatory authority of the competition at the european level.
the sale of The New Bank has been difficult in the final stretch, from the moment in which the only binding proposal to purchase 100% of the bank, the investment fund of the north-american Lone Star, demanded a State guarantee of eur 2.5 billion for the activity that is on the side bank of the old BES, which represents the assets the non-banking of the bank, which amounted to € 9.7 billion.
unanswered Questions
Both the Bank of Portugal as Sergio Monteiro (hired in November 2015 by the Resolution Fund to help sell the New Bank) know of these conditions imposed by the buyers and were-in the reporting to the Government. However, now efforts are being made to move away from the same of the proposed purchase.
The Express questioned, on Thursday, the Ministry of Finance about whether it is to be studied, the nationalization of the bank, in which moulds would be possible and what would I need to do to move forward with this solution, in particular with the european authorities, the European Central Bank (ECB) and the Directorate General of the european Competition (DG Comp). Asked also what impact it would have on the deficit and the nationalization assumed to withdraw from the New Bank toxic assets and create a side bank, as somewhat happened with LBW. Finally, who would manage it? Until now they did not answer.
Cost and negotiation with Brussels will not be easy
In fact, no one dares to say what would be the cost of a nationalization of the New Bank. But several sources in the financial sector acknowledge that the costs will be high. In addition, there are many legal issues, given that the New Database is a database transition that obeys to specific rules, resulting from the resolution. The Government would have to convince DG Comp to approve this solution, since the bank will need to be recapitalizado this year and this may amount to 750 million euros, a value that is listed in the business plan of the bank management, led by António Ramalho.
Also, nobody explains if that was injected to 3 August 2014 – a 4.9 billion euros – would have to be assumed by the State in a scenario of nationalization. If it is true that the Resolution Fund is public, it is also true that what was injected is to be paid by the contributors to the fund, or by the dealer. How much would the State pay for the New Bank to the Resolution Fund? Once again, there is no answer. Could apply a discount, as are the candidates in private to do, leaving the greater part of the invoice that was injected in August 2014 for the banks system to pay?
All of the sources contacted by the Express, who requested anonymity, say that hardly a transaction of this type will also have an impact on the deficit and on public debt. This even as the Government nacionalize the New Bank is paying to the Resolution Fund less than the 4.9 billion injected there is more than two and a half years.
Another question goes by the commitments made in the resolution. That is, being the New Bank to a bridge bank, its fate would have to always be selling, even if with losses, or its liquidation and orderly. It is true that governments can nationalize banks – see-if-the Italian example, with the intervention of the state in Monte dei Paschi, but this is not a bridge bank. However, some experts in the banking sector refer that the Portuguese Government may try to take advantage of this precedent in a negotiation with the ECB and DG Comp.
The executive António Costa will have lots of art to, in the absence of sale, the scenario preferred by all, to convince the european authorities to authorize the nationalization of the bank.
The country already knew that the sale of the New Bank would lead to a lot of losses to the Resolution Fund, I did not know is that this is likely to fall on the lap of the taxpayers.
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