The sale of Novo Banco is to go ahead as widely hinted, with invitation letters to be sent out next week to potential buyers.
The plan is to complete the sale by the end of July 2015 and with this in mind the Bank of Portugal has pre-selected those it wished to bid for Novo Banco, the ‘good bank’ part of failed BES.
The goal is to sell Novo Banco with the majority of its assets but excluding BES Investimento and some of its international operations such as those in Mozambique (Moza Bank) and France (Venetie).
In these cases, negotiations are underway for separate sales to be completed earlier than the July deadline for Novo Banco.
The Bank of Portugal's has selected an advisor for the transaction, BNP Paribas, and a timetable has been set.
The first step is for the letters to go out next Thursday to those who have registered an interest. The final prospectus will be published in early January.
In February, non-binding offers hopefully will be received from interested parties.
In March and April 2015 these parties will be able to examine Novo Banco’s accounts in detail during a due diligence period and binding offers may be received during May and June with the lucky winner announced in July 2015.
The Bank of Portugal is praying for some interest in this sale as the public purse it at risk of a hammering, as are the reputations of senior Bank of Portugal figures, if the offers received are significantly below the €3.9 billion shovelled into the bank when it was created when dividing BES into two parts.
Novo Banco received an injection of €4.9 billion when it was set up as a result of Banco Espiríto Santo going bust - € 3.9 billion was guaranteed by a taxpayer loan, €700 million was in the form of loan arranged by the Bank of Portugal and €300 million was from the Resolution Fund, topped up in a hurry from the other banks.
The government gets paid first so if the Novo banco sale price is below €3.9 billion the taxpayer will lose out, a situation that the Bank of Potugal dreads and one the finance minister would find seriously discomforting.
See also:
http://algarvedailynews.com/news/4078-novo-banco-sale-at-a-loss-will-not-threaten-banking-solvency
Comments
And during a crisis and with almost zero return on your investment the mattress is a good a place as any for your dosh. Or a bank in another currency - perhaps that cocky non-euro huddle of islands off the French shore, the UK and its sterling ?
Amongst other issues are whether the Luxemburgers (?) dismantle the original separation in to good and bad bank. Returning it all to bad bank- so as to chase down money owed to their people.
Then there are the thousands of misled investors piling their money into BES when the Bank of Portugal already knew full well that BES was distinctly flakey.... so had told the bank to recapitalise. Losing their money into a deep hole.
There is also the question of who has the 'deepest' pockets?
Foreign investors chasing getting their money back will follow the scent to the Novo Banco.
The TAP effect of travellers loyalty to something Portuguese what ever the price will also be eroded as the July deadline nears - so triggering capital flight from Novo Banco.