Selling Banif to Santander exposes taxpayers to an additional €1.7 billion loss

There will be an inquiry but Communist Party MPs already have said that there are some serious questions to be answered as a matter of urgency regarding the Banif sale.

The Ministry of Finance today was asked in parliament about the deal, specifically the sale of Banif to Santander Totta when a higher offer from Apollo that would not have left the taxpayer underwriting the whole deal.

The second serious point that has come to light is that Banif carried tax credits worth significantly more than the price agreed by Santander.

"Santander spends €150 million and gets a family of stable and significant clients, with a portfolio of loans practically free from impairments, a bank recapitalised by public funds and one which also includes a tax credit €289 million," claim MPs Miguel Tiago e Paulo Sá.

The €289 million in deferred tax assets can be converted into tax credits by the new owner of Banif as they were transferred to Totta as part of the deal which looks increasingly desperate and one-sided with the taxpayer losing out all along the line.

The US Apollo Fund proposed to buy Banif with a smaller loss to the exchequer that the one agreed with Santander where the acquisition of Banif for €150 million involved the State shelling out €2,255 million and guaranteeing any future bad debts, pushing the bill to over €3 billion.
The Apollo Fund deal required some State involvement, but the maximum loss was capped at €700 million.

The reason given for Apollo’s rejection by an increasingly suspect Bank of Portugal was that the Fund did not have a banking license.
MPs also asked today whether the European Central Bank and the European Commission refused Apollo on this point.

The government has remained silent on the matter as further facts come to the surface that relate to the Bank of Portugal governor Carlos Costa’s handling of the deal. Fresh from the BES/Novo Banco debacle, Carlos Costa appears to have avoided selling Banif to the highest bidder in the best interests of the public and preferred instead a sweetheart deal with Santander which leaves the taxpayer exposed to around €4 billion due to the inevitable collapse of one of Portugal’s smaller banks.

So far the government has not publicly commented on the Banif buyer but MPs are on the case, as will be those involved in the committee of inquiry,  to see if parliament was misled, to see if the Santander deal in the best interests of the taxpayer and why there had been no mention of €289 million in tax credits.

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