Novo Banco, which was meant only to hold all the good loans and assets from the collapsed BES, has reported a net loss of €1.395 billion for 2017, significantly higher than the €788 million the bank lost in 2016.
The 2017 accounts, signed off by CEO António Ramalho, refer to the year in which the Resolution Fund sold 75% of Novo Banco’s shares to the American Lone Star Fund for zero euros, while hanging on to 25% to ensure the public would continue to throw billions at the disaster created by the Bank of Portugal.
The bank, led by António Ramalho, will now need €800 million from the Resolution Fund to remain solvent. This requires taxyers to lend the Resolution Fund a further €450 million.
The €1.395 billion loss was created by an increase in impairments so that can activate request the Contingent Capital Facility, meaning capital injections from the Resolution Fund, which has insufficient funds so will have to borrow the €450 million from the Treasury, aka the taxpayer.
Novo Banco can carry out this massive bad loan write-off with the blessing of the European Commission which, despite a current spat over Novo Banco's allegedly slack lending controls, is happy that privately owned banks are bailed out and underwritten by the public.
“The losses presented were mainly due to the recognition of high amounts of impairment, in accordance with the requirements of the European authorities, so that banking institutions are able to recover profitability more quickly and consistently," stated the Novo Banco report sent into the stock market regulator.
The owner of Novo Banco, vulture fund Lone Star must think it's Christmas every day of the year and is making full use of the liability that the Portuguese State deliberately kept by the Resolution Fund retaining 25% of the bank's shares when it was passed to the Americans. Novo Banco is able to write off what it chooses as Portugal’s other banks and taxpayers will fund the losses.
Year after year, since the Novo Banco was created, the annual results have been negative so it is no surprise that today, with impeccable timing, an initiative was launched to jettison a further 440 workers before June 30th.
Novo Banco’s general trading, including net interest income, commissions on banking services, results of financial operations, income from equity instruments and other operating income, amounted to €719 million in the year, compared to €792 million in the previous year. This is a 9% drop when comparing the two periods, which shows the fall in the bank's trading activity.
The difference between interest charged on loans and interest paid on deposits was €398 million – compared to €514 million the previous year.