{"id":15539,"date":"2015-12-21T15:49:25","date_gmt":"2015-12-21T20:49:25","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15539"},"modified":"2015-12-21T15:49:25","modified_gmt":"2015-12-21T20:49:25","slug":"the-cost-is-very-high-portugal-taxpayers-face-e3-billion-loss-after-second-bank-bailout-in-2-years","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15539","title":{"rendered":"“The Cost Is Very High”: Portugal Taxpayers Face \u20ac3 Billion Loss After Second Bank Bailout In 2 Years"},"content":{"rendered":"

“The Cost Is Very High”: Portugal Taxpayers Face \u20ac3 Billion Loss After Second Bank Bailout In 2 Years<\/a><\/h3>\n

Back in August of 2014, Portugal had an idea.<\/p>\n

Lisbon would use some \u20ac5 billion from the country\u2019s Resolution Fund to shore up (read: bailout) Portugal\u2019s second largest bank by assets, Banco Espirito Santo. The idea, basically, was to sell off Novo Banco SA (the “good bank” that was spun out of BES) in relatively short order and use the proceeds to pay back the Resolution Fun. That way, the cost to taxpayers would be zero.<\/p>\n

You didn\u2019t have to be a financial wizard or a fortune teller to predict what was likely to happen next.<\/p>\n

Unsurprisingly, the auction process didn\u2019t go so well. As we recounted in September, there were any number of reasons why Portugal had trouble selling Novo, not the least of which was that two potential bidders – Anbang Insurance Group and Fosun International which, you\u2019re reminded, is run by the recently \u201cdisappeared\u201d Chinese Warren Buffett – suddenly became far more risk-averse in the wake of the financial market turmoil in China. Talks with US PE (Apollo specifically) also went south, presumably because no one knows if this “good” bank will actually turn out to need more capital going forward given that NPLs sit at something like 20% while the H1 loss totaled \u20ac250 million thanks to higher provisioning for said NPLs. Now, the auction process has been mothballed and will restart in January.<\/p>\n

This matters because if the bank can\u2019t be sold, the cost of the bailout ends up being tacked onto Lisbon\u2019s budget. The impact is substantial. In September, when the effort to sell Novo collapsed, the government restated its 2014 deficit which, after accounting for the bailout, ballooned to 7.2% of GDP from 4.5%.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

“The Cost Is Very High”: Portugal Taxpayers Face \u20ac3 Billion Loss After Second Bank Bailout In 2 Years Back in August of 2014, Portugal had an idea. Lisbon would use some \u20ac5 billion from the country\u2019s Resolution Fund to shore up (read: bailout) Portugal\u2019s second largest bank by assets, Banco Espirito Santo. The idea, basically, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1927,130,201,6910,4696,10386,683,4431,4318],"class_list":["post-15539","post","type-post","status-publish","format-standard","hentry","category-economics","tag-budget","tag-china","tag-deficit","tag-meltdown","tag-portugal","tag-prudential","tag-reuters","tag-warren-buffett","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15539"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15539\/revisions"}],"predecessor-version":[{"id":15540,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15539\/revisions\/15540"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}