ECB Vice President - no intention at all of attending Banif inquiry

The ECB vice president Vítor Constâncio says he has no intention at all in taking part in the Banif inquiry.

In a two page written apologia, Constâncio, a former Portuguese Finance Minister, said he only has to answer questions put to him by the European Parliament so he will not be available to explain the crucial role which the ECB played in Banif’s demise.

Vítor Constâncio argued that for him to participate in a Portuguese parliamentary committee would go against a European rule that the European Central Bank is answerable only to the European Parliament and not national governments.

Constâncio has been confirmed as attending the meeting which suspended funding for Banif, and it was hoped that he would be available to help explain what had gone on at the European level leading up to Banif’s collapse and sale to Santander.

Vítor Constâncio was criticised for his arrogant and proud attitude by Carlos Abreu Amorim who had insisted that every effort would be made to bring Constâncio to the committee meeting.

In his letter, Vítor Constâncio said that the ECB only oversees the largest banks in each country and anyway, it was not the job of the vice president of the institution. Banif, he says, was directly overseen by the Bank of Portugal.

This is all the more frustrating as it has taken some detailed work to discover that Vítor Constâncio was at the crucial board meeting of the ECB’s governors which approved the Bank of Portugal’s request to suspend Banif’s normal funding.

The former finance minister said in his letter that the ECB’s ability to intervene in the Banif process was "very limited" and would only be exercise if a proposed solution put deposits at risk and the financial system was in danger.

In December, 2015 the government and the Bank of Portugal announced a resolution for Banif with its sale to Santander Totta, for €150 million, toxic assets not included.

The Deputy Secretary of the Treasury and Finance has stated that the cost to the taxpayer of this ‘resolution’ may come down as low as €1.7 billion.

Ricardo Mourinho Felix, who will be at the Banif inquiry on May 4th, has given a pre-inquiry interview and said that the government asked Brussels to authorise a total liability of €3 billion for Portugal’s taxpayers, as a matter of prudence, but that the total that will be lost in the Banif rescue may be significantly lower.

Felix also hoped that the taxpayer could end up paying zero as the toxic and other assets are sold off over time by Octant, a company created to hold and sell those assets that were not transferred to Santander. He also said that there had been no proper valuation of the assets at the time of the sale because the European Central Bank had rushed things along.

Mourinho Felix is optimistic about the sale of these assets, but realistically estimates the total bill for the taxpayer will be around €1.7 billion by the time the dust has settled.

The Secretary of State admits that "the cost of the resolution for the Portuguese taxpayer was high and reflected not only the lack of certainty, but also the complacency of the authorities to the continued deterioration of Banif."

“The bank was in very bad shape in 2013 when it was recapitalised, and has become a bad deal for the Portuguese."

Mourinho Felix calls for those responsible to face the consequences, referring to former PM Pedro Passos Coelho, former Finance Minister Maria Luís Albuquerque and the Bank of Portugal governor Carlos Costa.

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