Anbang, Fosun and Apollo may sound like three characters from Lord of the Rings but in reality are the three brave companies willing to risk billions of euros of their shareholders’ money on buying Novo Banco, the carefully crafted ‘good bank’ that emerged from the wreckage of Ricardo Salgado’s once emblematic Banco Espírito Santo.
The putative buyers have until August 7th to improve their opening offers as the Treasury, under the guidance of Maria Luís Albuquerque, needs around 25% more than the current rather thin offerings to enable her to pay off the shed-load of taxpayers’ cash that was handed over to avert a fully blown banking crisis had BES been allowed to implode as it should have under normal market forces.
The final bids were in on time last week but a now rattled Novo Banco boss Eduardo Stock da Cunha asked the Bank of Portugal to extend the deadline so as to allow higher offers to be submitted, should the three foreign buyers feel inclined to do so.
In the certain knowledge that a desperate Bank of Portugal would ask for higher bids, the current bids were pitched low to enable higher ones to be placed within the inevitable extension to the deadline.
Fosun, Anbang and Apollo have a week to up their offers but there has been no word on when the final decision will be made or announced.
The review of the final, final offers will be made in a sale process ostensibly led by Eduardo Stock da Cunha but in fact controlled by the government which, with an election coming up in the autumn, needs €3.9 billion to enable it to justify having shelled out to float Novo Banco with a dowry including all the good assets of BES.
The buyer will need to be clear as to Novo Banco’s potential liabilities with Goldman Sachs keen to recover €835 million loaned to a subsidiary of BES days before BES went bust.
Goldman Sachs’ lawyers are sharpening their pencils in preparation for a court hearing in London in which they will claim Novo Banco has their money and it simply is not good enough to say the whole lot went south with the division of BES into the good bank/bad bank format devised by Bank of Portugal’s Carlos Costa last August.
Astoundingly, Carlos Costa claimed this week that Goldman Sachs should not have advanced the loan as Goldman Sachs was aware that BES was in trouble.
Costa kept this nugget to himself while BES mis-sold investment products to the tune of around €700 million to its existing depositors whose money simply has vanished in this massive game of pass the buck.
