A portfolio of more than 14,000 properties seized from customers who failed to keep up payments will be sold off by Novo Banco as it clears out its non-strategic assets to improve its capital position.
Share in companies also will be sold as the bank strives to increase its capital before the European stress test in November highlights the bank’s capital shortfall.
The sell-off is as a direct result of the failure by the Bank of Portugal to find a buyer for Novo Banco.
In a rising property market the bank, led by Stock da Cunha (pictured), admits to a problem as its property portfolio is falling in value due to its past lack of willingness to maintain its property assets.
Real estate sales allow banks to free themselves of property assets which they have been hanging on to in the hope that prices will rise and, as in the case of Novo Banco, many have been on the books for five years or more.
The properties have been built up by Novo Banco's rigid foreclosure policy throughout the recession as customers who found themselves behind on payments had their homes seized and placed ‘for auction’, usually with no bidders.
In these cases the bank has then credited customers with the often low patrimonial value of the asset and ended up as the owner, but without the necessity of having to pay council tax.
Portugal's banks also have been reluctant to offload their portfolios en bloc due the depressing affect on price levels caused by large numbers of properties suddenly for sale.
Novo Banco now is in a hurry and its depreciating portfolio can be blamed on its own reluctance to maintain its estate in good saleable order.
