Portugal's Resolution Fund pumps $386 mln into Novo Banco

Banco Espirito Santo SA em Liquidacao

05/06/2021 09:15

By Sergio Goncalves
    LISBON, June 5 (Reuters) - Portugal's Resolution Fund said
it had injected another 317 million euros ($386 million) into
Novo Banco, which emerged from the collapse of Banco Espirito
Santo (BES) in 2014.
    The new injection on Friday is contentious in Portugal as
Novo Banco is 75% owned by U.S. private equity fund Lone Star
and because the state-backed fund, which has the remaining 25%,
has already provided 3 billion euros in capital since 2017.
    Although all Portuguese opposition parties are against any
further injection of public money, the government last week
authorized the resolution fund to do so.
    The resolution fund said in a statement that the capital
injection was carried out on Friday and was "fully financed" by
a syndicate of seven Portuguese banks, which on Monday lent 475
million euros to the fund.  urn:newsml:reuters.com:*:nL5N2NK0L9
    It said it could inject another 112 million euros into
Portugal's fourth-largest bank in the near future, but that
depends "on the conclusion of a supplementary analysis".
    The fund is backed by all Portuguese banks which pay annual
contributions and it can access loans from the state and banks.
    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 in case of losses on the sale of
some toxic assets inherited from BES.
    The injection is meant to keep the bank’s solvency ratios at
the required levels.
    On Monday, Novo Banco reported quarterly profit of 70.1
million euros and a jump of 12% in net interest income, after
losses running into billions of euros since its rescue.
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($1 = 0.8220 euros)

 (Reporting by Sergio Goncalves;
Editing by Alexander Smith)
 ((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))