Portugal's ailing Novo Banco hopes for profits in 2021

Banco Espirito Santo SA em Liquidacao

19/05/2021 18:54

By Sergio Goncalves
    LISBON, May 19 (Reuters) - Portugal's Novo Banco, which was
carved out of the collapsed Banco Espirito Santo, said on
Wednesday it expected to complete its restructuring this year
and start making profits as it continues to slash non-performing
loans and costs.
    Chief executive Antonio Ramalho said he expected the bank
"to fulfil all the goals" of the restructuring imposed by
Brussels in 2017 and "increase the value of Novo Banco" for its
two shareholders.
    Novo Banco, which is 75% owned by U.S. private equity firm
Lone Star and 25% owned by the Resolution Fund, posted a 1.3
billion euro ($1.59 billion) loss in 2020 after huge provisions
for credit and asset risks.  urn:newsml:reuters.com:*:nL8N2LO5XL
    "I expect that Novo Banco will start making profits in 2021
and generating capital," Ramalho told a parliamentary committee.
"It is great...but it is also obvious that it cost Portuguese
(taxpayers)."
    Lone Star acquired the majority stake in Novo Banco in 2017,
with the sale contract stipulating that the Resolution Fund must
inject up to 3.9 billion euros if certain losses occurred from
the sale of toxic assets inherited from the collapsed BES.
    The cash injection is meant to keep the bank's solvency
ratios at required levels.
    Novo Banco has been offloading bad loans, real estate and
non-core assets under restructuring commitments agreed with
Brussels, and the Resolution Fund has already injected 3 billion
euros into the bank to cover those losses.
    Remalho said the strategy was to continue to clean up the
bank's balance sheet, reduce non-performing loans and costs.

($1 = 0.8191 euros)

 (Reporting by Sergio Goncalves; editing by Emelia
Sithole-Matarise)
 ((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))