(Updates with statement by Bank of Portugal)
LISBON, Dec 29 (Reuters) - The Bank of Portugal approved on Tuesday a transfer of bonds from “good bank” Novo Banco to Banco Espirito Santo (BES) in a measure that will help boost Novo Banco’s balance sheet by 1.985 billion euros.
The measure will help Novo Banco, which was created from BES in August 2014 after a 4.9 billion euro ($5.35 billion) rescue, plug a 1.4-billion-euro hole that was identified last month in the bank’s capital by the European Central Bank.
“From this measure, in net terms, there will be a positive impact on Novo Banco’s capital of about 1.985 billion euros,” the central bank said in a statement.
At the time of the rescue of BES, the banks’ good assets such as deposits and branch network were transferred to Novo Banco. Old debts and liabilities were kept with BES, which is being wound down.
The measure will mean that a series of bonds transferred to Novo Banco at the time of the rescue will be removed from its balance sheet and sent back to BES.
Last month, the European Central Bank ordered Novo Banco to plug a 1.4 billion-euro hole in its capital.
The Bank of Portugal has been trying to sell Novo Banco, but the process was halted in September as the bids it received were seen as too low.
The central bank said the sale process would be relaunched in January. The resolution of the capital shortfall could represent the lifting of an important hurdle in the sale. ($1 = 0.9152 euros) (Reporting By Andrei Khalip and Shrikesh Laxmidas. Editing by Jane Merriman and Andrew Hay)