“Good” Bank “Bad” Bank

“Good” Bank “Bad” Bank

Saving protect depositors and bank creditors who hold senior debt. This procedure will ensure that the operations of Banif, which will be transferred to Santander Totta, which is the Portuguese subsidiary of the Spanish group will continue “to function properly,” the Banco de Portugal. On Monday Santander announced the acquisition of the portfolio will have a “negligible impact” on the capital base of the group and will have a minor positive impact on earnings in the first year after the deal, reported Reuters.

National Lending Bureau

Shareholders and holders of subordinated debt, in turn, will remain in Banif, while preserving the “very limited group of assets’, which will go through the process of liquidation. “Troubled assets” will be transferred to a special company for asset management, complemented by the Central Bank.

The process of saving the Banif somewhat coincides with the act in 2014 rescue of BES, which was also divided into “good” and “bad” bank after its profitability suffered due to its large exposure to debt-ridden business empire of the family Eshpiritu Santo recalls Financial Times.

Banif is the seventh largest bank in Portugal, as of June 2014 total assets amounted to 12.8 bn. Euros, which is equivalent to about 7% of GDP. Attracted by the financial institution deposits worth 6.3 bn. Euros. The bank is the leading lender to the Portuguese islands of Madeira and the Azores, which holds over 30% of total deposits.

Portuguese government will save Banif

Portuguese government will save Banif

The Portuguese government will save even one of the biggest banks in the country – Banco Internacional do Funchal (Banif), as it will flow into the state aid of 2.2 billion. Euros and will differentiate its assets into “good” and “bad” bank. Healthy part of the business will be acquired by Spanish financial group Santander against 150 mln. Euros. This is the second time within 18 months that Portugal pour billions to rescue troubled lender recalls Financial Times.

“High price”

The new Socialist Prime Minister of the country Antonio Costa said that the rescue of Banif with state funds would require “high cost to taxpayers,” but has the advantage of being a “final decision”. On Monday, the bank’s branches will operate as usual, he said.

Rescue Plan provides shareholders and junior creditors to take losses of about restructuring. Acceptance comes after in August 2014 Banco Espírito Santo (BES), which was once the largest publicly traded bank in the country was saved 4.9 billion. Euros. Healthy her assets were split into a new financial institution – Novo Banco, which is still seeking a buyer, recalls FT.

In the popular Sunday night message from the Bank of Portugal announced that the rescue of Banif will include “a general public support” in the amount of 2.25 billion. Euros with which to cover “unforeseen future costs.” Most of them – 1.76 billion. Euros will come directly from the state budget and the remaining 489 mln. Euros will come from local funds to rescue failing banks, in which all financial institutions in the country contribute.