BPI boss says Portugal spent €8Bn on Novobanco and got back €2Bn – “I’m not happy!”

The CEO of Portugal’s high street bank BPI, João Pedro Oliveira e Costa, has put a damper on last weeks Novobanco sale contract celebrations by challenging that the Portuguese State had forked out €8Bn to keep the banks afloat for years and only got back €2Bn.

Novobanco had been created by the Portuguese government from the collapsed bank Banco Espírito Santo in 2014 to hold the former bank’s clients and salvageable non-toxic assets in a bid to prevent a possible systemic collapse of Portugal’s banking system at the time.

Over the next 8 years considerable cash injections from a resolution fund and other public, private and banking sector monies were pumped into the new bank to ensure its capitalisation while portfolios of properties and Non-Performing Loans were gradually cleared off the balance sheets in preparation of the ultimate goal – privatization.

That goal was finally achieved this year when the bank was sold lock, stock and barrel to the French banking group BPCE from its majority shareholder Nani Holdings (Lone Star) and the other shareholders (The Portuguese State and the Resolution Fund), for €6.4Bn.

“Sometimes I’m a bit surprised because we spent €8Bn on Novobanco and we recovered €2Bn and somehow we’re supposed to be very happy.

“I’m not happy”, said the banker after being asked by the press about the possibility of the Portuguese government advancing with a fresh tax on the banking sector to compensate the end of the banking sector supplementary solidarity tax which was levied on the sector as a contribution to bail out the sector after a number of banks collapsed or got into trouble at the time.

“Well, I could be realistic and perhaps it wasn’t possible to do better. But being satisfied and making a celebration of it is something, I have to say, I’m finding difficult to swallow”, he added.

Oliveira e Costa, who was speaking at the presentation of BPI’s results for the first nine months of the year, rejected the idea of expressing any “displeasure” towards the Minister of Finance, Joaquim Miranda Sarmento – who announced earlier this week that the State would recover two billion funds injected into Novobanco – or that he feels “damaged” by the process that culminated in the sale of the former BES to BPCE.

“The current government and Finance Minister have executed well a plan they had in hand. (…) But I cannot be satisfied with the loss that was back there, not with the current government,” clarified the BPI leader.

Due to the losses related to the resolution of BES and the recovery of Novobanco, BPI has already contributed €300 million to the Resolution Fund and will still have another €600 million to deliver to the fund by 2046, according to the maths done by Oliveira e Costa.

“We paid and paid for things that we didn’t even do,” said the bank boss.

“The same thing happened with the solidarity tax issue. It was a temporary thing and suddenly I have something that is fixed and now it seems that we have to replace it,” he said, returning to the question that had been asked initially.

The Minister of Finance said that he would “revisit taxation” of the banking sector after having revoked the solidarity surcharge that was declared unconstitutional.

“Why do only some pay? We have have we several financial entities operating in Portugal that do not pay the taxes, nor do they pay into the Resolution Fund,” he complained.

Oliveira e Costa also complained that the banks were “systematically” called upon to pay more taxes when there were problems. “This is an ideological problem”, he said.

On the subject of taxes, the CEO of BPI also noted that state spending “has increased by €40Bn and taxes too” in recent years and that one should reflect on what one is doing. “Instead of going to collect more taxes, whoever they are, are we making the necessary effort in terms of expenditure? Expenditure is not investment,” he stressed.

“So, the message I want to give is not that I don’t pay. For God’s sake, we have always paid and contributed a lot to society!” he added.

Source: ECO Online