Fernando Ulrich, the Chief Executive of Banco Português de Investimento (BPI) is looking closely at buying Novo Banco, the BES ‘good bank’ financed with taxpayers’ money and a massive contribution from the banking rescue fund.
Ulrich at last has admitted that BPI is studying a possible purchase, "It is mandatory for those in the market to study what this opportunity could mean."
The well-respected banking boss added, "I think it is the professional duty of the executive teams of banks that are operating in the same market, as is the case of BPI, to study what this opportunity can represent."
Admitting that Novo Banco is a big bank with operations in many financial market sectors Ulrich was asked if he would wait for an audit of the accounts before making a move. The chief executive of BPI said that he already is studying the accounts using the information that currently is available.
However, the sale of Novo Banco, "besides being an opportunity, is also a great risk because of the responsibility of returning the funds invested” to his fellow bankers.
"If the sale of Novo Banco falls short of the capital that was invested in Novo Banco, it’s the other banks that bear the loss, including BPI."
Ulrich omitted to mention the taxpayer who, via the largesse of the Bank of Portugal, sent a cheque for €3.9 billion to fund the rescue plan.
Ulrich added that the final decision could only be taken when the formal sale process for Novo Banco had started and noted that, in his opinion, "it will probably be difficult for it to be sold for the €4.9 billion that was injected."
"I think the Espírito Santo Group should have been managed more accurately and with more care taken in safeguarding the interests of its own shareholders who have generally come out of the situation with high losses."
"In the case of BPI, there are no secrets," said Ulrich, echoing the assurances of Ricardo Salgado, the Chief Executive of Banco Espírito Santo in the lead up to its record losses and insolvency.
Today the Espírito Santo Financial Group declared bankruptcy as its last ditch filing for creditor protection was rejected by a Luxembourg court.
Espírito Santo Financial Group was the holding company that controlled Banco Espírito Santo and its subsidiary Espírito Santo Financière which now are all bankrupt.
The bankrupcies came after the court rejected a request for protection while the companies tried to get a restructuring plan together with management changes and refinancing. This marks the end for this discredited network of companies tied together by a common interest in money laundering, huge inter-company loans and tax issues.
Other companies in the Espírito Santo Financial Group, such as Espírito Santo International and the infamous Rioforte, still await the decision of the commercial court in Luxembourg.
This domino effect was started by the announcement of a first half loss by BES of €3.6 billion.
This unprecedented loss led the Bank of Portugal to announce a BES bailout of €4.9 billion.
The inter-relationship of the Espírito Santo companies may have been close to impenetrable, but they are not invulnerable.
