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BPI boss predicts losses when Novo Banco is sold

bpiFernando Ulrich, the Chief Executive of Banco Português de Investimento (BPI) is looking closely at buying Novo Banco, the BES ‘good bank’ financed with taxpayers’ money and a massive contribution from the banking rescue fund.

Ulrich at last has admitted that BPI is studying a possible purchase, "It is mandatory for those in the market to study what this opportunity could mean."

The well-respected banking boss added, "I think it is the professional duty of the executive teams of banks that are operating in the same market, as is the case of BPI, to study what this opportunity can represent."

Admitting that Novo Banco is a big bank with operations in many financial market sectors Ulrich was asked if he would wait for an audit of the accounts before making a move. The chief executive of BPI said that he already is studying the accounts using the information that currently is available.

However, the sale of Novo Banco, "besides being an opportunity, is also a great risk because of the responsibility of returning the funds invested” to his fellow bankers.

"If the sale of Novo Banco falls short of the capital that was invested in Novo Banco, it’s the other banks that bear the loss, including BPI."

Ulrich omitted to mention the taxpayer who,  via the largesse of the Bank of Portugal, sent a cheque for €3.9 billion to fund the rescue plan.

Ulrich added that the final decision could only be taken when the formal sale process for Novo Banco  had started and noted that, in his opinion, "it will probably be difficult for it to be sold for the €4.9 billion that was injected."

"I think the Espírito Santo Group should have been managed more accurately and with more care taken  in safeguarding the interests of its own shareholders who have generally come out of the situation with high losses."

"In the case of BPI, there are no secrets," said Ulrich, echoing the assurances of Ricardo Salgado, the Chief Executive of Banco Espírito Santo in the lead up to its record losses and insolvency.

Today the Espírito Santo Financial Group declared bankruptcy as its last ditch filing for creditor protection was rejected by a Luxembourg court.

Espírito Santo Financial Group was the holding company that controlled Banco Espírito Santo and its subsidiary Espírito Santo Financière which now are all bankrupt.

The bankrupcies came after the court rejected a request for protection while the companies tried to get a restructuring plan together with management changes and refinancing. This marks the end for this discredited network of companies tied together by a common interest in money laundering, huge inter-company loans and tax issues.

Other companies in the Espírito Santo Financial Group, such as Espírito Santo International and the infamous Rioforte, still await the decision of the commercial court in Luxembourg.

This domino effect was started by the announcement of a first half loss by BES of €3.6 billion.

This unprecedented loss led the Bank of Portugal to announce a BES bailout of €4.9 billion.

The inter-relationship of the Espírito Santo companies may have been close to impenetrable, but they are not invulnerable.


+1 #2 Davida 2014-10-10 11:17
BPI itself is in no way healthy !

Moodys rate it "non-investment grade speculative" .... and S & P 's with "significant speculative characteristics".


ie a very dodgy investment just owning shares in BPI. Risky. Yet this is a bank and should be 'standing like a cornerstone of a countries economy'. Errr - correction a Portuguese bank.

Come on BPI - tell us how many billions are tied up in under performing or total loss loans to businesses and house owners ?

Whilst on Banks; an interesting insight into the 1 million euro annual costs of Bank of Portugal senior staff jetting round the world in Correia da Manha the other day. By the firm that used to handle the bookings.

Apparently only 5 star hotels will do but discounts were available and presumably taken. Yet this firm revealing an interesting 'difference' between the price they booked at and payed the banker and that lesser amount which the hotel actually got paid.

Which we can all asume was the pocket money for these top millionaire government bankers.

Now wonder Barosso's boy wants in ! So would most of us !
+2 #1 Denzil 2014-10-09 20:53
discredited network of companies tied together by a common interest in money laundering and tax evasion ...

This has always been the counter argument to any idiot saying that developed countries have banking scandals. Just like Portugals.

Invariably, in recent times - these are rogue divisions or individuals. Not the entire bank. The bad guys are found and punished. Everyone involved knows that wrong has been done

Where Portugal heads off in an entirely new direction is that a new employee had to buy into the corruption and dishonesty. It was all intentionally bad for years. Do so or leave.

And Portugal - not yet having any culture of whistleblowing - meant no 'honest' employee would admit what the bank and investment groups were doing.

The only amusing bit is to hear of the many millionaire Portuguese advised by Espirito Santo NOT to take advantage of tax amnesties Portugal was offering a few years ago. Told it would put them on the radar and mean them explaining to Financas where their 'dodgy' money came from.

Allowing Espirito Santo to steal from these millionaires this 'already stolen money' !!