Novo Banco hires detectives to investigate large debtors, no success

By TPN/Lusa, in News · 16-03-2019 18:54:00 · 0 Comments
Novo Banco hires detectives to investigate large debtors, no success

The monitoring committee for the management of Novo Banco’s assets said it hired international detectives to investigate the fortune of a default client, without success, and which caused a “gigantic” loss for a credit to buy Portuguese Commercial Bank (BCP) stocks.

The two members of the committee responsible for monitoring the management of Novo Banco’s assets, which has losses covered by the compensation mechanism of the Resolution Fund, José Rodrigues de Jesus and Bracinha Vieira, were heard in parliament on Wednesday in the budget and finance commission.

Vieira said that the committee even asked Novo Banco if it would be “possible to hire an international detective firm to investigate in offshores the fortune” of a given client and acknowledged that this had been tried, but without success.

De Jesus corroborated that Novo Banco “has been after people to see what they have in North American and Brazil” in the attempt that these assets would cover the credit.

He said that in 2005 and 2006, there was a “very large” Banco Espirito Santo (BES) loan for the purchase of shares of BCP and that this operation led to a “gigantic loss” for Novo Banco, because the guarantee was a pledge of BCP shares, which have since devalued 96%.

On 1 March, Novo Banco announced it would request the Resolution Fund a new capital injection of €1.14 billion to cover losses with the assets included in the compensation mechanism (non-performing loans, overvalued properties) agreed upon at the time of the sale of Novo Banco to the US Lone Star fund, in October 2017.

These mechanisms determine that Novo Banco can request up to €3.89 billion for eight years (up to 2026) to meet capital requirements and losses in a set of assets from BES (notably non-performing loans).

Since the compensation mechanism has been established, there is a monitoring committee to access and issue opinions “on issues relating to the [compensation] mechanism, its strategic direction and the assets covered,” according to the Bank of Portugal.


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