November 17, 2014 / 4:51 PM / 5 years ago

Portugal expects offers for Novo Banco in early 2015

LISBON, Nov 17 (Reuters) - The Bank of Portugal expects to receive offers for Novo Banco, the good bank that was carved out of Banco Espirito Santo (BES), at the beginning of next year and binding offers in the middle of the second quarter, the bank’s governor said on Monday.

“We have indications that there is interest,” Carlos Costa told a parliamentary committee on Monday.

Portuguese authorities are hoping to sell Novo Banco in the coming months. It was carved out of BES, once Portugal’s largest listed bank which had to be rescued to the tune of 4.9 billion euros ($6.1 billion) in August under the weight of the debts of the Espirito Santo family that founded it.

“We see indicative offers at the beginning of the year (2015) and that there are binding offers in the middle of the second quarter,” Costa said.

“If we obtain a solution in which there are interested parties that offer a value that has a small discount, and also guarantee the necessary competition and credit supply in the system, we will have passed through the storm,” he added.

The collapse of BES prompted concerns about Portugal’s banking system and the flow of credit to the economy, especially as it was prompted by the bankruptcy of the Espirito Santo family which has many other business interests in Portugal.

Costa earlier told the parliament committee that the Bank of Portugal was investigating former BES management over suspected illegal debt issuance via a Swiss go-between to replace liabilities of the Espirito Santo family with BES debt.

BES was rescued by a bank resolution fund with credit from the government but which ultimately belongs to Portugal’s other banks. Costa said if there were losses from the sale of Novo Banco, they could be converted by the government into credits to the financial system.

1 US dollar = 0.8026 euro Reporting by Sergio Goncalves; Writing by Axel Bugge; Editing by Mark Potter

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