The Portuguese State would have been less damage if it had accepted the first offer to purchase from Santander. The deal, which turned out to close two days later with the same Spanish group, it cost € 2.2 billion. What has changed between the two proposals was being closed the sales process and chosen the path of resolution of Banif. This change was imposed by Brussels and became the heaviest public bill for the benefit of Santander.
This is what we concluded after known the outlines of the original proposal of Santander, the Express was found.
It is recalled that there was a Banif sales competition, launched on 20 November, and had six proposals. The delivery time of tenders to December 18, a Friday, but none was accepted, by requiring state aid, which the Directorate General for Competition, European Commission body, rejected. Because of this it began that same evening a resolution process and sale of assets and Banif liabilities for which were two guests of the six candidates (the others were excluded because they are not banks, condition also imposed by Brussels).
Santander and Banco Popular have negotiated this weekend with the Bank of Portugal, who chose Santander, publicly announcing the deal on Sunday at 23h58, two minutes before the deadline imposed by Brussels.
What has never been made public proposals were presented last week in the sales contest. The private equity fund Apollo made the highest bid, but was excluded for not being a bank. The second best proposal was from Santander. The Express know that Santander offered to pay them € 150 million for the same assets that ended up, but without the possibility to review later, but excluding external operations (Brazil, United States, Cape Verde and Malta) and Açoreana insurer. In addition, the state would lose € 125 million of bonds convertible into capital (CoCos) that Banif had in default since the end of 2014. This is € 125 million which served to Brussels “veto” the sale, as would a new State help.
Instead of this proposal, two days after Santander ended up not buying the Banif but a set of assets and liabilities of the bank. Paid them € 150 million by a pool of assets similar to that of the proposed purchase. The state has lost the same the € 125 million it lent. The difference is that Santander received those assets already capitalized, which improved the capital ratios. In addition, Santander was as lender of Octant (the vehicle that was with troubled assets of Banif) of € 700 million in 10-year bonds, with state guarantee.
The deal eventually benefit group accounts Santander, which paid a price below the book value of Banif recorded a positive impact on their 2015 accounts of € 283 million. The value just was not higher because in the meantime, Santander Totta has made a provision of € 316 million to cover “unexpected situations” that may arise in the Banif credit portfolio, as explained António Vieira Monteiro this week.
Who was against this operation from the beginning was George Thomas, who was chief executive of the bank. “Banif was not sold”, but the target of a “forced liquidation” he said this week (see text below). At a conference in Lisbon, Thomas questioned the legality of the process. “It’s a question that I have,” he said, citing the State Budget: “Under the law, a bank to be capitalized by public aid has to be viable. If the bank has been resolved it is because the Bank of Portugal considered it unfeasible. . If considered unfeasible, could not be capitalized by public aid “He concluded:” On December 20 destroyed in Portugal, without any economic rationale, € 2.2 billion of public savings and about € 250 million private savings. “
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