For 2020 (the year in which it incurred losses of €1,329 million), Novo Banco has requested the Resolution Fund for €598 million to capitalize, under the mechanism agreed with the Portuguese state in 2017. The reimbursement of this amount is up to the Bank Resolution Fund (a state-level entity).
In June, the Resolution Fund considered that it had to pay 429 million euros only due to differences with Novo Banco (related to the provision for the sale of the branch in Spain, the valuation of assets and bonuses attributed to managers), given that the amount was planned to be 429 million euros.
However, he announced that he paid only 317 million euros and made 112 million euros based on an “additional investigation” of the policy to cover interest rate risks of long-term public debt.
Today, in presenting the results for the first half of the year (profits of 137.7 million euros), the organization led by Antonio Ramalho considered that the Resolution Fund owes him the total amount requested, so that 277.4 million euros are still to be received from him. He requested 598 million euros.
“Novo Banco considers €277.4 million due under the contingent capitalization mechanism and is operating the legal and contractual mechanisms at its disposal in order to ensure receipt of these,” it reads accounts sent to market.
However, the bank says that, given that it did not receive the funds, it deducted the amount from the regulatory capital account.
At the end of June, the Lisbon Court rejected an injunction from Novo Banco demanding payment of €112 million to the Settlement Fund (FdR), and the bank appealed the decision.
Novo Banco and the Settlement Fund also have differences regarding the application of the IFRS 9 transitional accounting system, which are being analyzed in court. The bank wants to move from the transitional regime to the full adoption of the new international accounting rules, which the settlement fund is opposed to.
This dispute is in the arbitration court and may affect the money that must be paid by the settlement fund if the bank wins the lawsuit.
On May 19, Antonio Ramalho said in Parliament that the bank may ask the settlement fund to recapitalize this year’s accounts of more than 100 million euros due to the transitional accounting system IFRS 9.
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