Bank of Portugal relaunches sale of Novo Banco

16 November 2015

Financial advisors hired by the Bank of Portugal will immediately resume contacts with parties potentially interested in buying Novo Banco, the bank that inherited the healthy assets of bankrupt Banco Espirito Santo, the central bank said.

In a statement issued Friday in Lisbon, the central bank also said that the aim was to prospect the market and before the end of the year launch the new sales process.

Although preparations for the second attempt to sell have already begun, the official procedure, such as the formalisation of transfer rules, specifications and even how the sale will be carried out – whether as a whole or in instalments – is not expected to begin this year.

The re-launch of the sales process came on the same day as the results of stress tests carried out by the European Central Bank (ECB) to nine European financial institutions, including Novo Banco.

Novo Banco passed the elasticity test in the baseline scenario but in the more adverse scenario, with negative shocks of a reduced likelihood having an impact on the macroeconomic and financial variables in 2015-2017, a lack of equity was calculated in the amount of 1.398 billion euros.

To cover the shortage of capital, Novo Banco has, as of now, a period of two weeks to present a capital plan to the European Central Bank setting out the measures it intends to apply, and because it failed in the more adverse stress test scenario, the bank has nine months to implement these measures.

Among the various measures to meet the identified capital requirements is that Novo Banco will have to implement “in the short-term” are the sale of insurance company GNB – Seguros de Vida [formerly BES Vida] and the sale of non-strategic holdings. (macauhub/CV/PT)