PM calls emergency meetings over troubled Banif

Despite Banif’s management telling everyone that everything is just fine, while wringing an apology from TV24 whose recent report alluded to troubled times for the Madeiran bank, the Prime Minister António Costa this evening has called party leaders to a emergency meetings to discuss - Banif.

Costa is receiving parliamentary leaders at his official residence in São Bento “to analyse the financial situation at Banif,” according to official government sources.

The series of crisis meetings is taking place after the Bank of Portugal admitted that it and the Ministry of Finance, "are monitoring the Banif situation, ensuring the stability of the financial system and the safety of deposits," a sure sign of impending doom.

This waffle will not make disappear the PWC report into Banco Internacional do Funchal (Banif) which warned the Bank of Portugal’s governor Carlos Costa of serious troubles ahead unless action was taken, but the words 'Costa' and 'action' seldom sit happily in the same sentence.

The Bank of Portugal reported in the same statement that, "as revealed by national authorities, European authorities and the Banif Board of Directors," the bank's restructuring plan "is being examined by the European Commission,” while Banif searches for a white knight to buy the government's 60.5% shareholding.

"On Sunday evening the Ministry of Finance said that it is monitoring the Banif situation following the news that the state is preparing to introduce a ‘resolution,’ i.e. some sort of bailout, in addition to the €1 billion plus the bank needed last time, adding

"The Banif restructuring plan, as is public knowledge, is being examined by Directorate General for Competition of the European Commission. In parallel, a sales process is running in international markets bank led by its Board of Directors.”

The Government and the Banif management have been working on a solution that involves the creation of an investment fund to accommodate the distressed assets of the portfolio of real estate bank - the old 'good bank/bad bank' scenario.

The goal is to free the bank's balance sheet of assets and reduce its capital requirements. The fund will be 100% owned by Banif and this solution was presented in September to the Competition Directorate General of the European Union in Brussels.

Banif has lost 85% of its value in a year under the current Board whose members remain reluctant to resign as, of course, they will be the 'best people to see the bank through these troubled times,' not for a moment considering that the current situation has anything to do with their performance.

The bank’s shares are now reported in decimal points, it owes the taxpayer around €800 million, it has defaulted on a €125 million repayment to the treasury and has spent much of this morning threatening to sue TV24 for exacerbating its decline and causing 'irreperable damage' for which the station management later apologised.

In late 2012, the state rescued Banif with €1,100 million, of which €700 million was a capital increase and €400 million was in the form of 'contingent capital instruments,' so-called 'CoCos.'

So far Banif has managed to pay back just €275 million.

The government needs to move quickly as after January 1st, EC rules come into play that put the onus on shareholders and depositors should the bank collapse or again need refinancing.

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