The state bill has been rising for five years.
In August 2014 the Bank of Portugal, with the support of the government, at that time led by Pedro Passos Coelho, decided to shut down Espírito Santo bank and a new bank was created to protect the clients: Novo Banco.
Since then Novo Banco has received €6.9 billion of public money, although €3.9 billion as a loan through the Resolution Fund.
After several efforts to sell the bank, in 2016 the US investment fund Lone Star acquired 75% of Novo Banco (with the Resolution Fund keeping 25%) but it did not pay any price, instead it invested €1 billion in the bank’s capitalisation.
The agreement between Lone Star and the Portuguese state has provided a compensation mechanism for eight years and up to €3.8 billion from the Resolution Fund for any loses caused by former toxic assets.
In 2017 the bank received €792 million from the Resolution Fund, of which €430 million from a public loan.
Last week the bank requested another €1.149 billion.
At the end of the day, Portuguese coffers have lost €4.692 billion in capitalising Novo Banco, a sum which can rise to €5.841 billion if the new request is accepted.
Portugal’s Finance Minister Mário Centeno has said Novo Banco will get “not one euro” extra of public money, because the Resolution Fund loan will be paid in 30 years.
“This recapitalisation will be made, once again, through a public loan but that does not mean the state is giving money to the bank.
The Resolution Fund borrows money from the State and that loan will be paid in 30 years”, he told RTP3 TV channel.