Vítor Bento, the head of Banco Novo which took over the good assets of the collapsed BES banking business, has admitted that part of his plan for the high street lender is for branch closures and associated redundancies.
Bento is preparing a restructuring plan which he says will be ready in three months time which inevitably will involve a cost reduction programme focussing on the bank’s nationwide branch network.
Vítor Bento claimed in a SIC interview this weekend that Novo Banco is now a 'stronger' institution than the former BES and stated again that customers are protected by the €100,000 government backed deposit guarantee scheme.
The new man obviously will be concentrating on creating a branch network and administration that is slimmer and fitter than the previous BES set up, "We have to make the bank profitable and create mechanisms for generating revenue," adding that, "the bank today is safer and stronger than it was. Depositors are protected, they can continue to rely on Novo Banco."
As for those customers who spent the past week taking their money out of BES branches, Bento reckons the impact will be minimal despite reports that €200 million was transferred from BES accounts to Caixa Geral in one day.
In addition to working on a restructuring plan, Bento is committed to continue to fund the country’s business sector, where feasible.
Among the objectives listed by Bento is to repay within two years the loan of €4.9 billion from the Resolution Fund, underwritten by the taxpayer despite claims to the contrary by the government.
To compound BES’ problems, the bank had to repay "around €10 billion" to the European Central Bank.
How the bank was pushed over the edge:
Shocking information about the BES debt level is contained in the minutes of an extraordinary directors’ meeting of the Banco de Portugal.
The ECB insisted that BES fully repaid loans from the central bank on the same day that BES access to credit lines was suspended, according to the minutes that have been published on a law firm’s website.
The meeting held last Sunday, August 3, was on the same day that the demise of BES was announced.
The Bank of Portugal has been asked to comment about the leak of the minutes of the meeting, but official sources declined.
At the same meeting at which the European Central Bank (ECB) suspended the bank's access to monetary policy options, the minutes reveal that BES was required to "fully repay its debt from the Eurosystem of around €10 billion."
This would have to be paid back by "close of business on August 4," i.e. the ECB gave BES three days to return the money, an impossibility.
The Bank of Portugal concluded that the withdrawal of BES credit lines from the ECB left no option but to fund the bank from the rescue fund.
According to the minutes of the meeting, the ECB call on the €10 billion loan left BES "in a situation of serious and grave risk of default on its short-term obligations" and that "imperative and urgent" intervention was needed.
Three hours after the meeting at the Bank of Portugal last Sunday, the governor informed the media that BES would be taken over by Novo Banco which would get a capital injection of €4.9 billion.
The minutes were published by lawyer Miguel Reis who later explained why his office was keen to show that the European Central Bank had forced BES to "fully repay" the €10 billion loan in just three days.
"We publish this document for the simple reason that, as far as I know, the contents were not known and it is of great importance to the legal community, to clients of Banco Espírito Santo and for many of our customers and to the Portuguese public in general. Essentially, we exercise the right to inform which is guaranteed in the Constitution," said Miguel Reis from Miguel Reis & Associados.
The lawyer has advised shareholders of BES to join a class action which would cost them less than if individual cases were lodged against BES.
