The European Commission has sent a letter of explanation about the collapse and sale of Banif Bank to members of the parliamentary commission of inquiry.
The Commissioners say it became "evident" that at the end of December 2015, Banif was in a parlous state and the main thing was to avoid a "disorderly liquidation."
"Given the situation at the increasingly fragile bank, it became clear that a solution needed to be found for the reopening bank on Monday, December 21, 2015, to avoid a disorderly liquidation with consequences for the financial stability of the Portuguese banking system," read part of the 59 page letter.
The Commissioners argue that it is not their job to supervise banks, to work on State bailouts or to define strategies to solve banking problems.
"The Commission's role is to ensure that all the proposed measures are in line with EU legislation, including the rules on State aid" claim the Eurocrats.
Part of the written submission laid the blame for Banif squarely on the shoulders of the Passos Coelho coalition government, the Bank of Portugal and the bank's management, adding that the Banif case "strongly contrasted" with the other Portuguese banks.
"Since the temporary approval of state aid in January 2013, the Commission has repeatedly urged Portugal to act in the case of Banif."
This comment is aimed at the former Finance Minister, Maria Luís Albuquerque who kicked the Banif can down the street until she and her government were out of office in the Autumn of 2015, leaving the mess for the new Prime Minister, António Costa to handle, which he and his new finance minister mis-handled.
Over the weekend that the ‘resolution’ was being worked out for Banif, there was "close coordination" at a political level between the European Commissioner in charge of competition, Margrethe Verstager, and Portugal’s Minister of Finance, Mário Centeno.
On Sunday December 20th, at the end of the night, the Bank of Portugal and the Government announced a resolution for Banif with the sale of all the good assets to Santander Totta and the transfer the toxic assets to a company called Octant.
The State shovelled €2.23 billion into the deal which forced a 2015 re-budgeting process with repercussions still being felt today as the government missed the 2015 budgetary targets opening the way for EU fines and sanctions.
This government also saw fit to give Santander Totta a guarantee on €746 million of shaky loans on top of writing off €800 million that the taxpayer already had thrown at the problem in 2012, money that has never been returned.
Santander Totta was quick to pay out €150 million for the good parts of the Banif business with the taxpayer holding the shitty end of the stick with a total exposure of €3.6 billion to a business that, we were assured by the regulator, was just fine.
Banif's cost to the State is minor when compared to the road-crash developing at Caixa Geral where the latest conservative estimate is that the state owned bank could end up having cost the taxpayer €8 billion under the regulatory eye of Carlos Costa, the governor of the Bank of Portugal whose incompetence continues to defy gravity.
The government wanted to hold emergency meetings behind closed doors to work out the best way to present the Caixa Geral catastrophe to the public but Passos Coelho's PSD has managed to push for a full commission of inquiry into the bank which seems to have been run by various fiscally incompetent directors for well over a decade.
