Change of wording on Novo Banco sale pledge - government expects a loss for the taxpayer

The Minister of the Presidency has reiterated the government's preference that Novo Banco is sold off, rather than nationalised

Maria Manuel Leitão Marques said the sale of the bank, currently being worked on with US vulture funds and possibly one remaining Chinese financial group, should go ahead to guarantee "the minimum possible impact on the public debt."

This change of wording by the government is in preparation for a low price and corresponding financial loss when the bank is sold.

Until now, the prime minister has assured parliament that Novo Banco will be sold, “at no loss to the taxpayer,” a claim that has looked increasingly hard to achieve with low bids tabled from US funds, Lone Star and Apollo-Centerbridge set against the €4.9 billion thrown at the 'resolution' to the collapse of BES by the Bank of Portugal's governor Carlos Costa in 2014.

The Minister of the Presidency slipped in this change of words during an interview published on Sunday in Diário de Notícias.

The government stance now is: if the sale to a private bidder causes less loss than if the bank was nationalised - one of the options still open to the Bank of Portugal - then a sale is preferable.

Maria Manuel Leitão Marques was speaking just days after parliament pushed for nationalisation, mainly due to pressure from the Left Bloc and the Communist party.

The two US bidders have relaxed their conditions that the taxpayer undewrites non-performing loans at the loss making Novo Banco, and both have taken in Portuguese partners in the realisation that this would make their bids 'feel better' to the Bank of Portugal whose antediluvian management style harks back an age when this sort of nonsense was almost obligatory in order for a foreign company to do business in Portugal.

Maria Manuel Leitão Marques

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