Portugal's finance minister is confident that the planned sale of Novo Banco to the US vulture fund, Lone Star, is on track and will go ahead as planned.
The sale of Novo Banco remains under threat from bond holders, nursing losses of around €1.5 billion, who have gone to court for compensation. This has raised concerns among analysts that these legal disputes still might upset the planned sale.
In an interview with Reuters, Finance Minister Mario Centeno said "all the information I have is that all the foreseen timelines are being met" and that the sale was going ahead this summer. Centeno added that the legal challenges would have “no practical impact on the completion of the sale," suggesting the probability that, should the bank of Portugal be obliged to refund bond holders, that the taxpayer again will be footing the bill.
Those in charge of the process being conducted by the Bank of Portugal, have been asked whether there is a Plan B, to which the assurance was that, there is, but no details will be revealed.
Much feared investment company, Black Rock, is leading the bondholders and is seeking an injunction to block the sale of the ‘bridge bank’ as they fear that of the bank is sold off, they will have a harder time getting compensation for the €1.5 billion in losses caused by the bank of Portugal’s action in switching their bonds from Novo Banco to the old BES, thus rendering the bonds close to worthless.
Another court process is in the offing as at least one failed bidder aims to halt the sale process and have it reopened to at least have significantly higher bids reviewed.
The sale of Novo Banco needed to recover the €4.9 billion handed to Novo Banco when it was set up after BES went bust in August 2014.
The offer from Lone Star, which has been accepted, provides for €1 billion in refinancing for 75% of the share capital, leaving the taxpayer liable for an additional €3 billion in liabilities having received zero contribution from the sale.
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