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Finance Minister hits out at Bank of Portugal's mishandling of BES resolution

MinisterCentenoFinanceThe star of Portugal’s improving finances, Finance Minister Mário Centeno, said on Wednesday that the resolution for the collapsed Banco Espírito Santo, devised and agreed by Carlos Costa at the Bank of Portugal, already has cost taxpayers hundreds of millions of euros, and it’s not over yet.

Centeno said that the Banco Espírito Santo 'resolution' created an incalculable risk for the financial system, which only recently has been quantified with the sale of Novo Banco to Lone Star.

Centeno (pictured above) added that the 2015 U-turn by the Bank of Portugal, to transfer senior debt from Novo Banco back to BES, cost the State hundreds of millions of euros and that the sale of Novo Banco does not mean that the taxpayer is off the hook as if Novo Banco has to pay up for losses, the taxpayer will be picking up the bill.

The Finance Minister and his Assistant Secretary of State, Ricardo Mourinho Félix, were attending a Parliamentary Committee on Budget and Finance to answer questions about the sale of Novo Banco and took the opportunity of roundly criticising Carlos Costa's management of the financial crisis, triggered by the collapse of BES.

Social Democratic Party MP, António Leitão Amaro, asked Caetano whether the State had taken on yet more responsibilities and liabilities with the sale of Novo Banco to US vulture fund, Lone Star. This sale could cost taxpayers up to €3.89 billion but there are other liabilities.

Ricardo Mourinho Félix, said that risk still exists, "Yes, there is such a possibility, it is not worth hiding it," he said, explaining that the State had to guarantee to pay future liabilities and legal costs - "if the State had not assume these costs," said Felix, "no one would have bought the bank."

The Finance Minister said that the sale of Novo Banco was necessary in determining the overall risk to the financial system, adding that the taxpayer now has an annual budgeted liability of €850 million.

MP, Cecília Meireles said that the government had failed, "It failed to sell the entire bank: 75% of the bank was sold to Lone Star and the Resolution Fund kept 25% but has kept 100% of the liabilities,” adding that one of the main objectives of the sale was that there would be no taxpayer guarantee - and there is.

It is clear that the Bank of Portugal's handling of the BES colllapse and the subsequent treatment of senior bond holders, made things worse but the governor of the institution, Carlos 'Mr Magoo' Costa, can not be sacked by the government and may not even care that in the wake of many of his decisions, taxpayers are left covering billions in losses.

Comments  

0 #7 Denby 2018-01-18 08:12
Charly,
Yeah.. same old, same old.no change there, same old rhetoric.
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-1 #6 Charly 2018-01-14 16:20
Denby, as you say so well, this Portugese "situation" is indeed so far beyond my abilities that I really don't find the necessary words to describe it. Of course "blind people" don't understand that...
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+1 #5 Denby 2018-01-14 13:21
Charly,
Instead of your usual rhetoric, try commenting on something positive or is this beyond your ability.
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0 #4 nogin the nog 2018-01-11 17:03
Quoting Peter Booker:
I have often written on your site, Ed, that we should return to the system where Directors of companies should be personally liable for the losses of their shareholders. Many of the banking disasters of the recent past would have been avoided if senior officials such as Costa staked their own finances to back up their own professional judgements.

Hmm.
Nice idea Peter, But the powers at be wouldn't be able to carve up tax payers funds when these orchestrated collapses happen.. Mr Magoo is not a fool, but was hand picked for this role.. 8)
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0 #3 Charly 2018-01-11 11:46
Sorry, I am totally fed up with this banana republic where corruption is the standard for white collars and poverty for the no collars. This country is a shame for the EU and for the world ! :-x
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+4 #2 Peter Booker 2018-01-11 08:50
I have often written on your site, Ed, that we should return to the system where Directors of companies should be personally liable for the losses of their shareholders. Many of the banking disasters of the recent past would have been avoided if senior officials such as Costa staked their own finances to back up their own professional judgements.
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0 #1 nogin the nog 2018-01-10 20:56
hmm.
Mr Costa is without ethics or moral standing. But when a Government can not sack or imprison this man. You have to ask your self why is one man in powered with such power. :-*
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