Mon, Sep 15, 2014 - Page 15 News List

BES’ top three quit after two months

MANAGEMENT WALK OUT:The three men, targeted with rebuilding the troubled Portuguese bank, quit after disagreeing with the central bank over long-term strategy

Reuters, LISBON

The rebuilding of Portugal’s Novo Banco — the successor to Banco Espirito Santo (BES) after a state rescue last month — was dealt a blow on Saturday with the resignation of the three men handpicked by the central bank in July to turn BES round.

Chief executive officer Vitor Bento, finance director Joao Moreira Rato and deputy chief executive officer Jose Honorio said they were leaving because their initial mandate to revive the bank with private money had changed too much since the government bailout.

BES, Portugal’s largest listed lender, had to be rescued after the collapse of the business empire of its founding Espirito Santo family, whose main holding firms are under creditor protection.

Analysts and auditors have warned some losses and liabilities might yet be uncovered at the bank.

The management resignations followed a reported disagreement with the central bank over Novo Banco’s long-term strategy.

Weekly newspaper Expresso said on Saturday, before the resignations were announced, that the executives had objected to the central bank’s plan to sell Novo Banco as soon as possible to recover the 3.9 billion euros (US$5.1 billion) in public funds used in the rescue.

The men were reluctant “to run a project that is not theirs,” said the newspaper, which did not name its sources. However, the three men denied any conflict.

“Our decision to resign is due to the fact that our mandate significantly changed since we began our roles, in mid-July. During our time at Novo Banco, we have contributed to the stabilization of the bank, taken steps to normalize operations and improve systems and launched a medium-term plan,” they said in a joint statement.

Bento’s initial mandate was to save BES using private capital, before the central bank decided on Aug. 3 to step in with 4.9 billion euros, some of which was provided by Portugal’s bank resolution fund, to recapitalize the “good bank” Novo Banco that it carved out of the troubled BES.

“A process for a swift sale of the bank has already been launched and is being managed by the Resolution Fund and the Bank of Portugal. We now feel that the right thing to do is to hand over the reins to another management team,” Bento said.

Expresso said the executives had offered to resign previously as they were against the central bank-ordered split of BES into Novo Banco and the “bad bank” that inherited the exposure to the Espirito Santos’ troubled web of businesses.

The Bank of Portugal said it would soon name new management for Novo Banco, and reiterated its intention to sell the bank to investors “within the shortest reasonably demandable period” to guarantee a stable ownership structure.

Local media said the regulator was likely to announce Bento’s replacement at the weekend.

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