Sobre o BES

How to rip off a country, Espirito Santo style, por Frances Coppola.

Parece que o Banco de Portugal e a Comissão Europeia não se entendem:

But there is something of a puzzle here. The Bank of Portugal calls the new "good bank" Banco Novo, or "New Bank", and seems to expect it to remain intact for the foreseeable future. But the European Commission calls it the Bridge Bank, and describes it as a "temporary credit institution". The reason appears to be the different objectives of the two institutions: the Bank of Portugal is primarily concerned with preserving financial stability and ensuring that BES customers suffer as little disruption as possible, whereas the European Commission is primarily concerned with minimising the impact of this bailout on the fragile finances of the Portuguese state.

The problem is the approach to funding the "good bank". Banco Novo (or Bridge Bank) is to be provided with capital to the tune of E4.9bn from the Bank Resolution Fund. But the Resolution Fund actually doesn't have this money or anything like it. So the Portuguese state will lend it E4.4bn from funds already earmarked for bank recapitalisation - that's around 2/3 of the earmarked funds. Earmarked it may be, but it is still public debt: unless it can be refinanced with private sector money VERY fast, the Bank of Portugal's statement that capitalising the new bank "does not entail cost to the public purse" is not remotely realistic.

The Bank of Portugal describes this loan as "temporary and replaceable with bank loans". I would like to know how long is "temporary" and which banks would replace the loans. But the European Commission has a different view of the means by which the loan will be repaid:

Portugal's Resolution Fund will provide EUR 4,9 billion as capital to the Bridge Bank. To this end, the Resolution Fund will receive a EUR 4.4 billion loan from the Portuguese State. This loan will be primarily reimbursed by the proceeds of the sale of assets of the Bridge Bank.

It seems that the Commission expects the "good bank" to be broken up and sold piecemeal. Oh dear. Clearly there will have to be some negotiation about this.

But the funding of the "good bank", confused though it is, at least should be adequate to allow the new bank to operate. And if a buyer could be found for the whole thing, or a successful flotation achieved, then the loan could be paid off without breaking up the bank. This has to be the best solution for BES's customers. So the fact that the Commission has not recommended this just shows how narrow its focus is. Never mind the people affected, worry about state finances. Hmm.