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Portuguese prime minister says solution for BES may involve costs to taxpayers through CGD (Jornal De Negócios)
The Portuguese Prime Minister admitted on Wednesday that the solution to the BES may involve costs to taxpayers due to the participation of CGD in the resolution fund, but the decision was the best option possible, the JdN reported. The fund injected €4.9bn (of which €3.9bn through a loan from the State). Portuguese banks would face losses, if Novo Banco is sold for an amount below €4.9bn, the JdN said.
=> The injection by the resolution fund was financed by a €3.9bn loan from the State and by the banks for the remainder. The total exposure for the banks amount to the full amount of the equity stake and we understand that it would take the form of an increase in the future annual contributions to the resolution fund in case of any loss taken in the upcoming sale of Novo Banco. These contributions are pro rata the size of total liabilities net of total capital and deposits. 24% had been mentioned in the press for BCP. We estimate CGD share to be 33% and BPI at 12%. We view a sale of Novo Banco at a discount price as impacting the whole banking sector and remain constructive on Novo Banco senior debt, in absence of any debt write-down tool in the resolution framework.
The Portuguese Prime Minister admitted on Wednesday that the solution to the BES may involve costs to taxpayers due to the participation of CGD in the resolution fund, but the decision was the best option possible, the JdN reported. The fund injected €4.9bn (of which €3.9bn through a loan from the State). Portuguese banks would face losses, if Novo Banco is sold for an amount below €4.9bn, the JdN said.
=> The injection by the resolution fund was financed by a €3.9bn loan from the State and by the banks for the remainder. The total exposure for the banks amount to the full amount of the equity stake and we understand that it would take the form of an increase in the future annual contributions to the resolution fund in case of any loss taken in the upcoming sale of Novo Banco. These contributions are pro rata the size of total liabilities net of total capital and deposits. 24% had been mentioned in the press for BCP. We estimate CGD share to be 33% and BPI at 12%. We view a sale of Novo Banco at a discount price as impacting the whole banking sector and remain constructive on Novo Banco senior debt, in absence of any debt write-down tool in the resolution framework.
