In a statement sent to newsrooms, Novo Banco responds to last week's “Público” news, which states that the bank sold a real estate portfolio with a discount of around 70% to companies in a fund with connections to the current CEO of New Bank, Byron Haines. The “Público” report referred to the North American Cerberus Fund.
Novo Banco denies that it “sold real estate portfolios with a certain discount on the market value. Such news is totally unfounded and requires clarification ”.
The institution says that between December 2017 and December 2019 it reduced its real estate portfolio by 56% and currently has 1,1 billion euros of real estate on balance. "The precepts provided for in the national banking legislation were followed and additionally, the commitment 12 agreed between the European Commission and the Portuguese State was fulfilled", the note added.
To effectively reduce the excess of properties that it had inherited from the past, Novo Banco explains that it launched two open and transparent international tenders to sell two portfolios of properties that it called Viriato and Sertorius. These sales obtained the amount of 523 million Euros (which is the sum of the Viriato portfolio sold for 364 million + with the Sertorius portfolio sold for 159 million) and, says the bank, “was the market price obtained for these properties through international, transparent and open competitions ”.
At Viriato, 47% of the portfolio was residential property and the remainder, land, industrial or commercial unused. 48 investors were contacted, 7 proposals were received, the two highest proposals were selected for a final negotiation won by Anchorage Capital Group, LLC. The sale was approved by the Bank's statutory bodies and for 17% of the sale that was protected by the Contingent Capital Mechanism obtained the authorization of the Resolution Fund. This real estate portfolio was sold for 364 million euros.
In the Sertorius portfolio, 13% of the portfolio was residential property, 6% hospitality and the rest land, industrial or commercial unused. 48 investors were contacted, 5 proposals received, 3 investors selected, of which two were in the final negotiation won by Cerberus Group. "The sale was approved by the bank's statutory bodies and for 20% of the sale that was protected by the Contingent Capital Mechanism obtained the authorization of the Resolution Fund", details the bank.
This real estate portfolio was sold for 159 million euros. Público supported its news of the discount, compared to the gross book value of these real estate assets of 487,8 million euros. However, “the difference in the valuation value in the balance sheet of these properties, which can always exist, is not a discount, it is the effect of the difference between the market price and the value of valuations that follow the cost method or that assume different estimates of construction capacity ”, explains the bank led by António Ramalho.
Novo Banco also adds, however, that “sales are all subject to the preemptive rights in force in Portugal and previously entered in the Portal ready for that purpose”.
The bank ensures that "it will continue to seek to reduce its portfolio of properties not used for exploration in accordance with regulatory requirements".