“Novo Banco is not a problem for the financial system” – BoP

The governor of the Bank of Portugal (BoP), Mário Centeno, has said that he believed that “if the contracts are fulfilled,” the Novo Banco “is not a problem for the stability of the financial system.”

Invited by RTP’s “Grande Interview” programme, broadcast on Wednesday evening, Mário Centeno was questioned on the approval by opposition parties of a proposal to amend the State Budget for 2021 (OE2021) that would halt the transfer of 476 million euros from the Settlement Fund to the Novo Banco and the impact of the measure on the stability of the financial system.

Underlining that a contract “has to be honoured by both parties” and noting that this is a contract monitored and supervised by several entities, the Governor of the Bank of Portugal, said that by fulfilling the contract “I want to believe that the Novo Banco is not a problem for the Portuguese financial system”.

Mário Centeno also referred to information that will arrive in the coming weeks and months “that will allow everyone to judge the length” of the contract “by all parties”, and stressed that everyone should be aware of the importance for the country of fulfilling the contracts and the responsibilities that the State has assumed.

Parliament adopted, in the framework of the OE2021, a budget proposal by the Left Bloc Party (BE) which cancels the transfer of 476 million euros from the Resolution Fund to the Novo Banco.

According to the BE’s explanatory note to the proposal, which puts the value of the financial assets at “EUR 0”, the authorisation for the transfer of €476,608,819 to the Novo Banco is “withdrawn”.

To date, 2,976 billion euros have already been injected (of which 2,130 billion euros came from Treasury loans), so that – under the contract – a further 900 million euros could be transferred in the coming years.