Novo Banco’s losses could reach €1 billion in 2017 with the Resolution Fund on alert to inject more capital which it is unlikely to have.The bank, 75% owned and controlled by American vulture fund, Lone Star, embarked on an aggressive policy of 'recognising losses' on toxic assets which, under the terms of the sale agreement, are the responsibility of the Resolution Fund supported by injections of cash from Portugal’s high street banks and topped up by loans from Portugal's taxpayers.
The accelerated write-offs reflect a requirement from the European authorities which want to clear bad debts quickly - this suits Lone Star which wants to return the former BES to profit in preparation for a probable sale in not less than three years time.
The government, aka Portugal's taxpayers, may well have to top up the Resolution Fund with a further loan if this institution's funds are not sufficient to cover the write-offs at Novo Banco.
Expresso’s Saturday edition concludes that taxpayers will have to inject up to €850 million to support the Resolution Fund under the terms of the sale agreement to cover the bank’s impairments.
Novo Banco’s record losses for 2017, of several hundred million euros, maybe as much as a billion, will necessitate a taxpayer loan two years earlier than expected.
The sale to the vulture fund contained clauses that left the Resolution Fund and taxpayers in the unenviable position of having to support futher losses as bad debts are written off by a management over which the State has no control.
Comments
You mentioned defined terms and anchored to some security. My Nephew and his wife in the UK have been offered a 5 year fixed term mortgage to purchase an apartment, (they already have a very large mortgage on their home. They have no security except their two job's, to me this is reckless banking. What would happen if one of them become unemployed or has to take a reduction on their wages and unable to meet the repayments.
EXACTLY! Will our judicial system ever be up to prosecuting, assets-freezing and jailing any (or all) of these 'politico-banksters'? Mmmm
Who says Organized Crime doesn't exist...
Every country has the equivalent of golden visa's, even dear old Blighty (England).
Don't be naive to think that The UK would not be involved in such corrupt activity, the Uk has even biger tricks lined up than just golden visa's.
The recent on is the crinion scandal and many more.
All the native Portuguese Banks failed with serious costs to mainly the Portuguese tax payer and more rarely the shareholders and investors. Is it not time to track down all Portuguese nationals who did well out of their native Bank collapses and get what they took out - back ?
This is still non-existent in Portugal - the only dodgy dealing revealed lately had all been triggered by foreign banks alerting the Portuguese Bank that they had logged the event at their end. So forcing the Portuguese Bank to at least note it. But still no follow up ever, particularly if it is Golden Visa's!
Taxpayers will never see a return on the €3 billion that the Bank of Portugal's Carlos Costa pumped into the bankrupt BES to create Novo Banco.