Ratings agency Moody's says that selling Novo Banco will be a big plus for Portugal’s State finances, because the capital that was injected has already been included in the public accounts.
"The capital injected in Novo Banco in 2014 has been recorded in the public accounts. There was a negative impact on the deficit that year. Of course selling Novo Banco into private hands would be positive," said Kathrin Muehlbronner, the person who gives Portugal its credit rating.
After the collapse of BES, Novo Banco was capitalised with €4,900 million by the Bank Resolution Fund. The Portuguese State shoveled €3,900 million in this fund and Portugal’s banks had to stump up the remaining €1,000 million.
The last round of talks to sell Novo Banco saw two Chinese bids of around €1.3 billion, way below the amound needed to repay these loans.
As for having to bail out Banif last year, Moody's says this devalued Portugal but that it "is not the only country that has had to rescue their banks."
Questioned about whether the Portuguese financial system needs consolidation, Maria Cabanyes of Moody’s gave the case of Spain, "We have seen a strong consolidation, but banks that merged do not necessarily become stronger."
"The situation for the Portuguese banking system remains weak, in the sense that it is still a challenge for banks to achieve an acceptable return on capital", said Cabanyes.
In early January this year, Moody's cut Novo Banco’s rating after the Bank of Portugal shifted €1.985 billion of debt back to BES, wiping out bond holders in the process.
As for Portugal’s chances of hitting its optimistic deficit target for the year, Moody’s said there is a 'high risk of failure.'
