Portugal looks for speedy sale after Novo Banco reshuffle
By Andrei Khalip
LISBON (Reuters) - Portuguese Prime Minister Pedro Passos Coelho stood by government policy toward the remains of failed Banco Espirito Santo (BES) BES.LS on Monday, saying a quick sale of its successor Novo Banco was necessary to avoid further risks.
His comments came two days after the rebuilding of Novo Banco was dealt a blow with the resignation of the three men handpicked by the central bank in July to turn it around, amid reports of disagreements over the speed of any disposal.
BES, which had been Portugal's largest listed lender, was the subject of a government-arranged bailout after the collapse of the business empire of its founding Espirito Santo family, whose main holding firms are under court protection.
The bulk of its risky assets, including about 2 billion euros of loans linked to the Espirito Santo family, were left behind in the original bank, but analysts and auditors have warned some losses and liabilities may yet be uncovered at Novo Banco, which took on BES's healthy assets.
Passos Coelho noted the state had poured 4.9 billion euros ($6.3 billion), mostly in public funds, into Novo Banco last month and risked more by lingering with the sale.
"The more time passes before the sale, the greater the risks faced," he told reporters, adding the government wanted the best possible terms for the operation. He did not specify any risks but analysts said a drain on deposits and litigation could undermine the value of the bank.
"The message is clear - accelerate the sale, at least there's some certainty on that now. The new team comes precisely with that mandate," said Albino Oliveira, an analyst at brokerage Fincor. He and other banking sources cautioned, however, that a speedy sale might not generate the most value.